Pokemon v Redbubble: the DMCA doesn’t apply Down Under

Pagone J has awarded Pokémon $1 in damages and 70% of its costs from Redbubble for misleading or deceptive conduct and copyright infringement. An interesting aspect of the case is that Redbubble’s implementation of a notice and take down scheme under the DMCA didn’t save it from liability, but did influence the ruling on remedies.[1]

Redbubble provides a print on demand online market place by which artists can upload their works to the Redbubble website and purchasers can then buy the artworks or designs applied to desired products such as t-shirts, cups and the like. A person uploading a work to the marketplace warrants that he or she has the relevant intellectual property rights and indemnified Redbubble against infringement claims.

The evidence showed Google searches in which paid (sponsored) and organic search results listing “Pokémon” products such as t-shirts bearing Pokemon’s Pikachu character[2] which could be ordered from the Redbubble site. The sponsored links were paid for and arranged by Redbubble through the Google Merchant Centre and the products themselves were offered for sale through Google Shopping. From the tenor of the judgment, I think that the designs were uploaded by third parties, but Redbubble arranged the “fulfillers” who printed and shipped the t-shirts (and other products) with the designs printed on them.

Pagone J found that Pokémon owned the copyright in the images of the Pokémon characters depicted on the various products in evidence. Further, the images were uploaded without Pokemon’s consent.

Pagone J found therefore that Redbubble had infringed Pokemon’s copyright and misrepresented, contrary to sections 18[3] and 29(1)(g) and (h) of the Australian Consumer Law, that the products were official or authorised Pokémon products.

In finding that there had been misrepresentations that the products were sponsored or approved by Pokémon, Pagone J referred, amongst other things, to the fact that the “sponsored” links did include the word “sponsored” (although this meant in fact that the products were sponsored by Redbubble, not Pokemon). His Honour also found significance in the fact that:

There was nothing on the Redbubble website to inform the consumer that there was no connection, authorised or otherwise, between Redbubble on the one hand and [Pokemon] (or any other entity authorised to exploit Pokémon products) on the other.

Copyright subsistence and ownership

Pokémon was able to prove it owned the copyright in the artistic works through the evidence of its attorney responsible for obtaining copyright registration in the USA. Although the attorney, Mr Monahan, had not been personally present when any works were created, Pagone J considered his evidence sufficient. At 36, his Honour said:

…. He conceded in cross?examination that he had not stood over the shoulder of any creator and, therefore, that he did not have direct eyewitness, or other direct, knowledge beyond that gained from “detailed consultation with the client” but that “with respect to each series of the cards, [he had] consult[ed] with the client to determine which – for instance, which Japanese card they derive[d] from, or [… where] the artwork comes from”. His specific and direct evidence was that of consulting with the client to determine that the works were made by the Japanese company and were made as the Japanese card, although, as mentioned, he did not fly personally to Japan and had not been witness to the creation process. It had been his specific professional responsibility to obtain and secure registrations in accordance with lawful entitlements and requirements. He was confident in that context of his conclusion that the Pikachu work was not a copy based upon an animation cell because of his experience over many years of consulting with the client as his professional obligations and legal duties. In specific response in cross?examination about being confident in giving evidence that the pose of Pikachu was not derivative of any other pose already published, Mr Monahan said that every investigation he had done about the card making process enabled him to say that the cards were generated on their own and were not derivative of the animation, “common poses notwithstanding”.[4]

Further, unlike Perram J in Dallas Buyer’s Club, Pagone J also accepted that the certificate of copyright registration in the USA identifying Pokémon as the claimant to copyright ownership was sufficient to enliven the presumption under s 126B(3) of the Copyright Act. (Given the history of the provision recounted by his Honour, one might think this should not be too controversial: afterall, how many other countries out there have a copyright registration system?)

Copyright infringement

Pagone J then held that Redbubble had infringed the copyright in three ways. First, his Honour held that Redbubble infringed by communicating the infringing images from its website. Although the images were uploaded by third parties, Redbubble made the communication for the purposes of [s 22(6)][22]: Pagone J distinguished Redbubble’s position from that of ISPs like iiNet at [48]:

In the present case Redbubble does not provide the content of the communications in the sense of being the originator of any of the 29 images on its website said to be infringements of the Pikachu work. In each case the originator was the artist who had placed the image on the Redbubble website. Redbubble, however, was responsible for determining that content through its processes, protocols and arrangements with the artists. Redbubble’s position is not like that of an internet provider. Redbubble is the host of the website with the infringing material. It has a user agreement with artists which deals with matters including the possibility of infringing materials, an IP policy, and a team dedicated to deal with impermissible content.

Secondly, offering the products for sale online was sufficient to enliven s 38 which, amongst other things, extends to exhibiting “infringing” articles in public by way of trade.

Although there appear to have been some rather unspecific complaints about copyright infringement by Pokémon between 2012 and 2014,[5] Pagone J found that Redbubble knew, or ought reasonably have known, that the products were infringing from the date of the letter of demand from Pokémon’s external solicitors on 25 November 2015.[6]

Thirdly, Pagone J held that Redbubble had infringed Pokemon’s copyright by authorising the manufacture of the infringing products when orders for their purchase were placed.

In this respect, it is worth noting that Redbubble had implemented and acted on a notice and takedown system under the (US) DMCA.[7] Pagone J recognised, therefore, that Redbubble did not expressly authorise infringement and took conscious, considered and reasonable steps, both proactively and responsively, to prevent infringements.[8] These, however, were not enough. At [67], his Honour said:

The business established by Redbubble carried the inherent risk of infringement of copyright of the kind complained of by [Pokemon]. It is true that Redbubble sought to mitigate the risk, but it was an inevitable incident of the business, as Redbubble chose to conduct it, that there were likely to be infringements. It could have prevented them by taking other steps but for business reasons Redbubble chose to deal with the risk of infringement by a process that enabled the infringements to occur. Such infringements were embedded in the system which was created for, and adopted by, Redbubble. There may have been a sound commercial basis for Redbubble to manage the risks of infringement as it did, but in doing so it authorised the infringements which occurred.

Remedies

Pokémon sought $44,555.84 in damages by way of lost royalties for the consumer law breaches and only nominal damages for copyright infringement. As already noted, however, Pagone J awarded only $1 in total.

The evidence did not establish that sales made by Redbubble were lost sales by Pokémon. There was, for example, no evidence that many of the sales were sales of kinds of products sold by Pokémon or its licensees. For example, his Honour said:

…. Many of the items sold through the Redbubble website involved a “mash up” of images, such as the combination of Pikachu and Homer Simpson. The finding of an infringing use of a work, or an impermissible representation in trade, does not necessarily lead to the conclusion that the sale made by the infringement or upon the misrepresentation was necessarily a sale that would have been made by the wronged party. The unreliability of such an assumption in this case can be seen from the fact that the infringements were in the use of the image in mash ups in, and in items that were not sold or authorised for sale by [Pokemon]. ….

Given the notice and take down processes put in place by Redbubble, Pagone J was not prepared to find the infringements were “flagrant”, warranting the award of additional damages under s 115(4)

Pokémon Company International, Inc. v Redbubble Ltd [2017] FCA 1541


  1. Implementation and compliance with the DMCA scheme explicitly affected the ruling on additional damages.  ?
  2. Even if you haven’t played it, you must have seen all those people milling around in parks at lunchtime trying to “capture” these imaginary Pokémon Go “critters”. Pokemon itself has an even longer history. There are also trading card games and a successful television series which has been broadcast in Australia since 2000 and distributed on over 57,000 DVDs.  ?
  3. If you are not sweltering in the southern summer sun, s 18 provides “A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.” And s 29(1)(g) and (h) prohibit making false or misleading representations in trade or commerce about sponsorship, affiliation or approval.  ?
  4. Curiously, at [44] (when discussing ownership by proof of a certificate), his Honour also said Pokémon had not proved ownership on the basis of authorship.  ?
  5. In fact, Pagone J subsequently found that Redbubble did in fact remove listings when Pokemon notified it that they were infringing.  ?
  6. It is less than clear from the judgment what action Redbubble took in response to the letter of demand. Ordinarily, one would assume that it had continued engaging in the infringing conduct but that seems a bit surprising given Pagone J records that Redbubble did comply with other take down notices once the subject of complaint had been properly identified.  ?
  7. The DMCA, being US legislation, does not provide protection from infringement in Australia under the Australian Copyright Act 1968. Redbubble also purported to operate under the corresponding Australian provisions ss116AA – 116AJ but, of course, it is not a carriage service provider and so they do not apply either.  ?
  8. Cf. esp. Section 36(1A)(c)[s36].  ?

Shape not misleading

Last week, we looked at Mortimer J’s reasons for dismissing Shape Shopfitters’ allegations of trade mark infringement against Shape Australia. Presumably, given the colour and stylistic constraints of the registered trade mark, Shape Shopfitters’ main attack was based on the prohibition against misleading or deceptive conduct under the Australian Consumer Law. It too was unsuccessful.

Shape Shopfitters’ contention was that, by changing its name from ISIS to Shape Australia, Shape Australia was misrepresenting to the public that the two businesses were affiliated in some way with Shape Shopfitters being the specialist shopfitting arm of the Shape Australia. The descriptive nature of the common term, Shape Shopfitters’ fairly confined reputation and the fact that most of its dealings were with well-established contacts combined to mean that there was no such misrepresentation.

In about October 2016 when Shape Australia changed its name, Shape Shopfitters had annual turnover of between $10 million to $13 million a year. Almost all of its business was in fitting out, or the maintenance of, retail food outlets; especially quick service restaurants. Two thirds of its jobs were for contracts under $5,000; over 90% was for jobs under $200,000. Most of its business was in Victoria. 88% of its business outside Victoria was for the same seven clients: Grill’d, Nando’s, Sumo Salad, San Churro, Mad Mex, Schnitz or Coco Cubano. All of whom were well-established customers. Most of its work came from invitations to participate in closed tenders requested by established clients or directly negotiated contracts, once again with established customers.

In contrast, Shape Australia had annual revenues of around $400 million and the average size of its contracts was $1.55 million. Its role was usually as head contractor and construction manager, contracting out the work to specialist sub-contractors. It did do, however, some shopfitting work.

Mortimer J rejected Shape Australia’s argument that the relevant public was restricted just to the purchasers of construction services. Section 18 is not limited just to consumers; it provides protection to all people dealing with the respondent. In this case, including suppliers such as architects and subbies.

Mortimer J also rejected Shape Australia’s argument that none of its customers would mistakenly think that there was a connection with Shape Shopfitters. That was irrelevant. The question was whether people aware of Shape Shopfitters’ reputation would be misled or deceived.

However, there was no real, practical risk that the public would be misled or deceived. The businesses were simply too different and those dealing with Shape Shopfitters were well aware of its identity: At [216] – [217]:

I am not satisfied that participants in the industry would be led into such an error [i.e. thinking that Shape Shopfitters was an arm of Shape Australia]. The parties’ business activities are too different, they operate in different areas, with the applicant being far more specialised and more geographically contained. The link the applicant posits is possible and not fanciful in a theoretical sense, but it is without any foundation in the reality of the way the parties’ business activities are conducted, and in the way the “participants in the commercial construction industry” encounter the two businesses. That is especially so when one considers evidence such as that from Mr Billings that the applicant secures a lot of its business through word-of-mouth referrals.

The most that can be said is that there is a likelihood that participants in the industry, on isolated occasions, may be led to confuse the two entities because they both have the word “Shape” in their name, and occasionally communications may be directed to one when meant for the other. That is what the evidence discloses has in fact occurred, from time to time, in relatively few instances.

While there was some evidence of confusion, confusion itself is not enough and they were isolated instances only. Quickly dispelled.

You might recall that her Honour excluded evidence of print outs of websites of various businesses as hearsay and prejudicial. Evidence of the registration of such businesses as companies or business names was admitted, however, because the evidence was official ASIC records. There were 12 such businesses.[1] While Mortimer J accepted that this evidence did not take the matter very far, nonetheless it showed that the public could well come across other “Shape” entities in circumstances which undermined the potential for Shape Shopfitters to be seen as an “arm” of Shape Australia:

I accept that evidence of the bare existence of these entities cannot take the matter very far. However, the number of such entities using the word “shape” in their corporate names, and (I am prepared to infer) trading activities, is not without significance. Even without more information about those entities, the relative prevalence of the word “shape” in corporate and trading names, frequently in conjunction with construction-related words such as “joinery” and “projects” suggests that “participants in the industry” (including potential clients, purchasers and subcontractors) might well come across other entities using the word “shape” in the provision, sale and promotion of their particular services. That possibility cannot be discounted, and it tends against the linear proposition on which the applicant’s case relies: namely, the likelihood that the applicant (and it would appear, only the applicant) will be perceived to be part of the respondent’s larger group, and perhaps as its specialist shopfitting arm. That linear proposition must depend, it seems to me, on the applicant occupying something of a unique place in the market so that such a representation by the respondent’s use of the word “SHAPE” could only be made in respect of the applicant, and not other entities. This evidence tends against such a conclusion.

There was also some evidence from a search engine optimisation expert. It showed that neither business had very active websites. Those people who searched for Shape Shopfitters, however, typically did so by reference to the term “shopfitters”. This reinforced her Honour’s impression that it was its shopfitting specialty that identified Shape Shopfitters. On the other hand, Shape Australia did not typically generate hits in searches on terms related to “shopfitting”. If it did come up, it was invariably placed below the result for Shape Shopfitters:

Because of this, people searching for the Shape Shopfitters Website through searches for these terms are very unlikely to be misdirected to the SHAPE Australia website.

The passing off allegations failed similarly for want of the necessary misreprensation.

Shape Shopfitters Pty Ltd v Shape Australia Pty Ltd (No 3) [2017] FCA 865


  1. Shape Building Pty Ltd; Shape Design; Shape Property Developments; Shape Consulting; Shape Constructions Pty Ltd; Shape Project Management Pty Ltd; Shape Builders Pty Ltd; Shape Joinery & Design Pty Ltd; Shape Fitouts Pty Ltd; Shape Projects Pty Ltd; Shape Construction; the 12th, Shape Developments Pty Ltd changed its name in the course of the litigation although the reasons for that were not known.  ?

Another get-up case gets up

The get-up for Homart’s CHÉRI ovine bio-placenta product has been held to misrepresent an association with Careline’s CHANTELLE product.

Chantelle

 

Chéri

 

 

 

 

 

 

 

Now, you might be thinking that CHÉRI marks out Homart’s product from CHANTELLE rather plainly. But the dreaded Red Bull and Peter Bodum cases reared their heads again.

Sales of Careline’s CHANTELLE product had exploded after it adopted its current get-up: from between $25,000 to $60,000 per year to over $2 million in between June 2014 and early 2016 when Homart introduced its competing product.

Homart’s get-up was nothing like the other products in its CHÉRI range. Its get-up was much closer than any other competing product to Careline’s. The boxes of the products were often displayed in stores stacked, with the lid of the top box open so that customers could see the contents.

 

 

 

 

 

 

Accordingly, the branding on Homart’s product was often not visible, at least initially. CHÉRI itself was not thought to be a particularly distinctive mark, especially as both CHANTELLE and CHÉRI began with the same “shhh” pronunciation. Burley J could not accept the explanation for the adoption of the get-up advanced by Homart’s designer.

After a very careful consideration of the evidence, his Honour summarised:

194 The unique combination of features making up the get-up of the CHANTELLE bio-placenta product are eye-catching. They extend to the packaging in open or closed configuration and provide strong visual cues by which a consumer would note and remember the product. From this combination, quite separately to the name, the consumer is informed of the origin, quality and type of goods being purchased. Homart has taken all of those cues.

195 The suggestion conveyed by the get-up is not, in my view, dispelled sufficiently by the use of the CHÉRI Australia brand name. The name CHÉRI Australia is a relatively weak mark for distinguishing otherwise identical products because:

(a) such reputation as Homart has in the mark CHÉRI is weak and has been significantly dissipated by reason of Homart’s choice to use it in packaging distinctly different to the products in the balance of the CHÉRI range (see section 9 above);

(b) the phonetic and visual similarities between the first letters of both the CHÉRI and CHANTELLE marks diminish the effect of the use of different words (see [85] above). In this context both Chantelle and Chéri are French sounding names. Both commence with “Ch…”. To persons not familiar with French, they are likely to be weak means of distinguishing otherwise identical products (unlike “Andronicus” and “Moccona” in Stuart Alexander). They are likely to be perceived as words that convey little or no meaning (I make this observation without particular regard to the level of English literacy of the target market and assuming it to be roughly on par within native English speakers); and

(c) the addition of the reference to “Australia” has a similar local geographical connotation to “Sydney” as used in the CHANTELLE bio-placenta product.

….

 

198 Further, the trade circumstances to which I have referred in section 5 above demonstrate that often the display of the bio-placenta products in stores may not clearly show the trade mark, for instance, when the products are stacked one on top of the other. In those circumstances consumers are likely to use the visual cues provided by the get-up of the packaging to indicate the product which they seek rather than the names.

199 In my view, it is likely that a not insubstantial number of persons within the relevant class, who are aware of the CHANTELLE bio-placenta product, would be diverted from a search for that product by the get-up of the Homart product. They may note that something seems different about the brand name, but be convinced by the other similarities in the get-up that her or his recollection as to the brand name was mistaken. A consumer familiar with the CHANTELLE bio-placenta product may well recall its get-up, but have no or an imperfect recollection of its name and acquire the CHÉRI bio-placenta product believing it to be the CHANTELLE bio-placenta product. This would be especially likely in circumstances where the store does not stock both brands. The rapier of suggestion caused by the similarity in get-up will in those circumstances result in a sale for Homart.

200 Further, the findings that I have expressed in section 8 above (Development of the CHÉRI bio-placenta product) as to Homart’s intention, lead to the application of Australian Woollen Mills. That authority was applied by the Full Court in RedBull at [117] (Weinberg and Dowsett JJ, Branson J agreeing) who said:

Without wishing to labour the point unduly, we again point out that where a trader, having knowledge of a particular market, borrows aspects of a competitor’s get-up, it is a reasonable inference that he or she believes that there will be a market benefit in so doing. Often, the obvious benefit will be the attraction of custom which would otherwise have gone to the competitor. It is an available inference from those propositions that the trader, with knowledge of the market, considered that such borrowing was “fitted for the purpose and therefore likely to deceive or confuse…”. Of course, the trader may explain his or her conduct in such a way as to undermine the availability of that inference. Obviously, this reasoning will only apply where there are similarities in get-up which suggest borrowing.

201 In the present case, I am satisfied that this was the intention of Homart. As noted in Red Bull at first instance (Conti J) at [64], the difference between the brand names is not necessarily decisive of an absence of the requisite intention. Nor, as I have noted above by reference to the Full Court decision in Peter Bodum, is the presence of a brand name determinative of an absence of misleading conduct. In the present case, in any action under s 18 of the ACL, one must look at the totality of conduct of the alleged deceiver.

202 I have found that Homart intentionally adopted a get-up for its product for the purpose of appropriating part of the trade or reputation of Careline. The choice of the CHÉRI Australia brand name was not, in the particular circumstances of this case, sufficient.

In the context of the findings at [198] above, his Honour had earlier noted at [29] – [30] that the cause of action could be made out even if the customer’s mistaken impression was dispelled by the time they had reached, or at, the sales counter. Burley J did discount Careline’s argument that the largely Chinese speaking customer base would not appreciate the different wording in Roman characters.

Does this mean Parkdale v Puxu is dead?

Homart Pharmaceuticals Pty Ltd v Careline Australia Pty Ltd [2017] FCA 403

Chemist Warehouse dismissed

While we are on the subject of misleading or deceptive conduct, the Full Court has dismissed “Chemist Warehouse”‘s appeal from Middleton J’s dismissal of its claim that stores like these:

Another view
Another view
Direct Chemist Outlet
Direct Chemist Outlet

misrepresented an association of some sort with stores looking something like this:

Some Chemist Warehouse storefronts
Some Chemist Warehouse storefronts

image022

 

 

 

 

 

 

 

There were some 19 grounds of appeal which the Full Court worked their way through in detail. The central problem for Chemist Warehouse was that Full Court said there was no error in Middleton J’s finding that the predominantly yellow colouring of the exterior of the Chemist Warehouse outlets was not distinctive – the distinctive feature was the “Chemist Warehouse” logo:

no error has been shown in his Honour’s findings that the primary colour palette used by Chemist Warehouse was not distinctive. First, there was considerable variability in the nature of the Chemist Warehouse get-up. The primary judge distinguished other authorities where secondary branding had been accepted on the basis of a consistent presentation of colours in a particular juxtaposition. Second, the colours had a functional aspect. Colour can be used for its practical or functional utility, for example, high visibility for a road sign. In the present case his Honour appears to have accepted that the colour yellow was used to take advantage of the attributes of visibility and its association with discount value; but such a function could apply to any type of discount goods, not just pharmacy goods. The use of yellow to create the so-called “yellow box” was also to draw the attention of potential consumers on the street; it cannot be said that the use of the colour yellow in that way denoted trade origin. His Honour accepted the functionality of yellow (see at [9], [10], [12], [14] and [100]). He also accepted that the yellow, blue and red combination served a functional purpose (see at [240]). No error is demonstrated in any of these findings.

Fourth, the dominant and distinctive “Chemist Warehouse” logo was the only consistent branding element across the appellants’ stores prior to May 2006 ….

The fact that other stores, like JB Hi-Fi and Ted’s Camera’s used a predominantly yellow background to attract attention was also not irrelevant to whether its use on pharmacies was distinctive.

Moreover, even if the get-up had been distinctive, there would have been no misrepresentation:

in any event, even if a colour-based reputation could have been shown, that would not have answered the question of whether there had been misleading or deceptive conduct or a misrepresentation.  The respondents had a different get-up with different distinguishing features.  Indeed the primary judge had distinguished the respondents’ stores by not only the “Direct Chemist Outlet” trade mark but also the different distinctive logo, cleaner appearance and lifestyle photographs.  None of these were part of the appellants’ pleaded get-up.  The respondents’ schedules two and three to its closing submissions, by reference to the primary evidence before his Honour consisting of the relevant photos, well summarise the variability in get-up used at the DCO stores and the Chemist Warehouse stores, and relevant differences.

The Full Court pointed out that proof DCO had copied elements of its get-up from Chemist Warehouse was not sufficient to invoke the principle from Australian Woollen Mills that someone who sets out to deceive will be presumed to have succeeded. For that principle to apply, it was necessary to show not just copying but also a subjective intention to mislead or deceive – to appropriate part of the trade or reputation of the competitor.

Finally (for the purposes of this note), the Full Court accepted Middleton J’s view that the appropriate time to assess whether DCO’s conduct was misleading or deceptive was when DCO first commenced use of its present get-up. Chemist Warehouse argued, in the alternative, that Middleton J should have made the assessment for each individual DCO store at the time it opened – the so-called geographical approach. Middleton J pointed to a number of problems with this approach. One problem was that there were some areas where the Chemist Warehouse store opened after the DCO store – who would be making the misrepresentation then. Further:

… if the Applicants and Respondents were concurrently trading and building independent reputations in separate areas, it may have been the case that it was not the Respondents’ conduct that was misleading or deceptive at that later time.

For example, the Lalor DCO store opened in 2014, well after 26 May 2006. Both parties had advanced their own reputations by that time. What is the Court to conclude is the position of the competing parties in that particular area and at that particular time? It is to be recalled that since 26 May 2006 both businesses involved in this proceeding have increased their respective exposure to the relevant consumers by opening many new stores. There has been co-existence in the market place for approximately eight years prior to litigation commencing. Further, stores have opened in numerous locations, and Chemist Warehouse stores have opened in close proximity to existing DCO stores (as in the case of the Warrnambool store, for example).

In any event, his Honour considered that the DCO get-up sufficiently distinguished its stores from Chemist Warehouse stores that no misrepresentation was likely to arise.

The Full Court considered Middleton J’s analysis was “unremarkable” and no error was identified.

Verrocchi v Direct Chemist Outlet Pty Ltd [2016] FCAFC 104

The power of a registered trade mark

If you have tried to buy, sell or rent property in Australia in the last 10 years (at the least!), like some nearly 7 million other Australians you have no doubt come across realestate.com.au, the web-portal run by REA Group. Real One also competes in that space.[1]

Bromberg J has held that Real One’s logos:

Real One 2nd logo
Real One 2nd logo
Real One 1st logo
Real One 1st logo

did not “pass off”[2] REA Group’s logos:

559.1

Nor did they infringe REA Group’s registered trade mark: [3]

TM No 1478263
TM No 1478263

However, the use of Real One’s URL in ads like this:

Real One Ad
Real One Ad

did infringe the registered trade mark! [4]

Bromberg J held that the uses both in the first line and the second line of the advertisment infringed. In contrast to his Honour’s rejection of the claim for misleading or deceptive conduct, Bromberg J explained at [241]:

In my view, the display of the term “realestate1.com.au” in the heading of a sponsored link would have been regarded by many consumers to be the trading and domain name of the business whose link it was. One of the central distinguishing features of REA’s realestate.com.au trade marks is the idea that the term “realestate.com.au” is both a brand name and a domain name at the same time. When Real Estate 1 used “realestate1.com.au” as a trading name, it took up that precise idea. In that context consumers are likely to pay substantive attention to “.com.au” because it serves the function of identifying the brand whose domain name is also being used as a brand. The whole of the domain name is likely to be read or at least scanned. In a circumstance such as that, there was in my view, a real danger of confusion on the part of a consumer familiar with REA’s realestate.com.au trade marks. That principally arises because in a scanning process of the kind which can occur on a search results page, the “1”, which is not very distinct in the context of a domain name in ordinary type face, is likely to be missed by some consumers.

First, his Honour distinguished Perram J’s proposition in the Solahart case that usually one can ignore the inclusion in a sign of elements like “www” and “.com.au” as merely “accoutrements” of the domain name system and so not matters that the public would pay attention to. Unlike the situation before Bromberg J, however, that observation was not made in a context where the .com.au element formed part of the registered trade mark.[5]

Second, I can certainly see that the bold “headline” (the first line) in Real One’s advertisment is plainly being used as a trade mark. But the use in the second line???

Yes, I know that cases have held that domain names / URLs are the Internet’s equivalent of a sign or billboard. That can certainly be true and, in the first line of the advertisement, the URL is plainly being used in that way, but surely with respect in the second line the URL is no more than an address.

Third, one might express some alarm that anyone can stop someone else using the term “real estate” (in connection with real estate services). There are, after all only 387 other registered trade marks in class 36 alone which include the words “real estate”. On the Internet, there is also at the least realestateview.com.au. Bromberg J’s first answer in [241] above is that it was not just the use of “real estate” that gave rise to liability: it was the use of that term and “.com.au” in combination and the comparative insignificance of the “1” in Real One’s URL.

Bromberg J did, however, recognise the problem and said at [247]:

As my conclusions demonstrate, registration of REA’s realestate.com.au marks has effectively given REA a monopoly over two highly descriptive terms when used in combination. Those terms are likely to be the most common terms on a search results page where a search has been conducted for a residential real estate portal. The protection conferred by REA’s trade marks over the use of “realestate” and “.com.au” in combination, provides REA with a monopoly over the term “realestate” in circumstances where its rivals seeking also to use “realestate” or a close variant thereof as a second-level domain, do not forego the advantages of using “.com.au” in their domain names. The natural advantage of a domain name which incorporates “realestate” to the commercial success of property portals will be apparent from observations I have already made. There is also a natural advantage in the use of the suffix “.com.au”. It is troubling that terms that are highly descriptive of a particular area of commerce and which provide significant commercial advantage should not be readily available for use by all who seek to participate in that commerce. However, in the absence of a successful challenge to the registration of REA’s realestate.com.au trade marks, whilst that may be troubling, REA is nevertheless entitled to the protection of the monopoly which has been conferred upon it.

The question has to be asked, however, on what basis could REA group’s logo be revoked or refused registration? Given the device elements (and the large number of other, competing devices), it would surely be held to be capable of distinguishing. The “good” old days (i.e., before the 1995 Act) were at least better in this respect: the Registrar could impose disclaimers to ensure these sorts of monopolies should not arise.

Two short points in conclusion:

His Honour did also find that Real One’s “real commercial” logo infringed REA group’s registration for its “real commercial” logo.

It would seem that Real One is still able to operate from its “.net.au” URL.

REA Group Ltd v Real Estate 1 Ltd [2013] FCA 559


  1. Bromberg J found at [258] that the principal of Real One adopted the name to pressure REA group into buying him out at some point, but also went on reluctantly to find no accessorial liability (akin to authorising).  ?
  2. For simplicity, I will treat that term as covering the actions for misleading or deceptive conduct (now under s 18 of the ACL formerly known as s 52 of the Trade Practice Act 1974) which, of course, was really the focus of that part of the case.  ?
  3. The number doesn’t seem to be identified, but TM Nos 811931 and 1075935 are for the mark in black and white and TM No. 1478263 is for the colour version reproduced in his Honour’s reasons.  ?
  4. Also contrast this result with the Thredbo Resort’s failure to stop ThredboNet using Thredbo in domain names to market rental accommodation at Thredbo village: Kosciuszko Thredbo Pty Limited v ThredboNet Marketing Pty Limited [2013] FCA 563 – Thredbo Resort having only pending opposed applications.  ?
  5. Decision under the UDRP have reached similar positions.  ?

Winnebago loses half an appeal

The Full Court has partially allowed an appeal from Foster J’s decision to order Knott Investments to stop using the Winnebago trade marks for “campers” or RVs not made by Winnebago. As a result, Knott can continue to use “Winnebago” if it can make it clear it is not associated with the Winnebago company.

Some facts

From about 1959, Winnebago had been making and selling its RVs under that brand name in the USA and eventually other countries including the UK and Canada, but not Australia.

Winnebago logo
Winnebago logo

In the early 1960s, Binns became aware of the Winnebago name and logo while travelling around the USA. In 1978, Binns and his wife started manufacturing and selling their own RVs in Australia under the name “Winnebago” and using the Winnebago logo. In 1982, they incorporated Knott which then took over running their business.

The Winnebago company discovered what Knott was up to by 1985. However, the Winnebago company did nothing about this until 1992 when the parties entered into a “settlement” agreement. Following this, Knott kept making and selling its own Winnebago brand RVs and registered the Winnebago logo as trade marks. Winnebago itself did nothing further until 2010, when it wished to enter the market in Australia and started proceedings alleging misleading or deceptive conduct, passing off and seeking revocation of Knott’s trade mark registration for Winnebago and the logo.

When do you test whether conduct is misleading or deceptive

The Full Court allowed Knott’s appeal insofar as it related to when Knott’s conduct had to be tested as misleading or deceptive. Foster J held this was in 1982 when Knott was recorded in the Register of Business Names as having commenced running the business, there being no formal documentation of a transfer of the business. The Full Court, however, considered that Knott was plainly the successor in title to the Binns’ business and so the relevant time was 1978, when the Binns started up.

This is important because the Full Court unanimously considered the relevant time to assess whether conduct is misleading or deceptive under s 52 of the TPA (as it was) and s 18 of the ACL (as it now is) is the date when the “infringer’s” conduct started, not some later date.

As it turned out, however, this did not help Knott much as the Full Court considered the evidence clearly established Winnebago had a “spillover” reputation in Australia in 1978 even though it had not traded in Australia at that point.[1] Therefore, Knott (and the Binns’) conduct was likely to mislead or deceive.

Estoppel, laches, acquiescance or delay

The issue that loomed large in the Full Court’s eyes was Winnebago’s delay in bringing proceedings to enforce its rights – 25 years after it first learned of Knott’s activities and 18 years after the “settlement” agreement. Over that period of time, Knott had built up its own substantial reputation in “Winnebago” in vehicles of its own manufacture.[2]

First, the Full Court agreed with Foster J that the “settelment” agreement did not authorise or concede any rights to use “Winnebago” to Knott. Clause 6 provided:

This Agreement does not address, impact upon, or relate in any way, manner or form to the use or ownership of the [Winnebago marks] in Australia or to any rights relating to the [Winnebago marks] based on reputation or use under any statute or at common law in Australia. By entering into this Agreement, Winnebago does not expressly or impliedly acknowledge that Australian Company has any rights of any nature whatsoever to the [Winnebago marks] in Australia. To the extent not expressed in this Agreement, this Agreement shall be without prejudice to the rights of Winnebago and Winnebago expressly reserves all of its legal rights.

Knott argued, however, that the 18 year delay in bringing proceedings meant it was unjust to permit Winnebago to bring proceedings now. Allsop J despatched this argument for six:

First, there was no clear representation, arising either out of the Settlement Agreement or from the conduct. The terms of the agreement, in their context, contained a degree of commercial ambiguity. The terms, however, of cl 6 could leave no doubt in Mr Binns’ mind that any practical confidence in him that Winnebago was not going to sue him was not based on any right conceded by Winnebago. He proceeded at his own risk. The finding by the primary judge at [155] of the reasons (not specifically challenged) that Mr Binns knew there was a risk of having to rebrand his product if Winnebago entered the market is also fatal to the submission. (emphasis supplied)

Allsop CJ and Jagot J rejected Knott’s arguments based on laches, acquiescance and delay both for similar reasons and because Knott had expressly disclaimed them at trial.

Notwithstanding this, the Full Court considered that Foster J’s order that Knott be restrained from using the Winnebago trade marks was unjust. Even though Knott (or, really, Binns) had adopted the Winnebago trade marks to take advantage of the Winnebago company’s reputation and there was evidence that some members of the public had been misled, nonetheless, Knott had over decades built up its own substantial, independent reputation. Instead, therefore, the injunction should only prohibit use which did not appropriately disclaim any trade association with the Winnebago company. At [67], Allsop CJ explained:

This limitation of relief can be seen to reflect not only the balancing of the respective interests of Knott and Winnebago in the reputation developed by Knott’s expenditure, in the context of Winnebago’s extraordinary (and informed) delay, but also the erosion of the reputation of Winnebago ….

and

The evidence reveals sufficient to conclude that at least some of Knott’s reputation in the use of the name and marks was the development of its goodwill and reputation; that not all of the development of its business involved the taking advantage of Winnebago’s reputation in Australia. In normal circumstances, this would not matter; it would be something that the party passing off would have to accept as a consequence of its wrongdoing. Here, however, Winnebago has contributed to this by standing by, informed of the position, for 25 years while Knott expended money and built a business, part at least of which was its own reputation. (emphasis supplied)

The disclaimer or dissassociation had to be clear on the vehicles Knott made in future as well as in its advertising and promotional material.

The third member of the Court, Cowdroy J, did not explicitly reject the laches or acquiescance defence, but agreed in the approach of Allsop CJ saying at [106]:

the Court considers that the granting of relief to completely restrain the appellants from the use of the Winnebago marks to be unreasonable in light of the substantial delay by Winnebago.

Finally, the Full Court upheld Foster J’s order to cancel Knott’s registration of the Winnebago trade marks. Knott had registered these in direct contravention of the terms of the “settlement” agreement.

Some thoughts

In 1992, a representative of the Winnebago company had written to its then Australian lawyers explaining:

… While we are obviously interested in persuading or compelling Mr Binns to cease using the subject marks in Australia, I really do not think that we can justify any additional expense. We are not selling our products there nor do we have any plans to do so. There has in the past been some indication that Mr Binns was experiencing some financial duress and perhaps with any luck he will go broke. In any event, at least for the time being, I think we will just continue to monitor this situation … [3]

No doubt, the sentiments will resonate with everyone advising a foreign brand owner in Australia. The Full Court’s approach may provide a warning. The terms of the “settlement” agreement were sufficiently limited to preserve the Winnebago company’s right to enter the market and object to misrepresentation of association, but failure to enforce its rights promptly has left it encumbered with a competing, independent user of its brand. On the other hand, Knott did not bring matters to a head in negotiating the “settlement” agreement and finds itself constrained. As Allsop CJ said, it ran the risk. How the disclaimer should be effected is unclear, but there are indications in Allsop CJ’s reasons that Knott has been able effectively to dissociate its business from the Winnebago company, while still using the Winnebago trade marks, since 2003.

Knott Investments Pty Ltd v Winnebago Industries, Inc [2013] FCAFC 59


  1. Nothing controversial in the principle: see ConAgra v McCain [1992] FCA 159; 33 FCR 302, although successful cases are still relatively rare.  ?
  2. For example, Foster J referred to Knott spending over $6million in advertising expenditure between 1992 and 2010.  ?
  3. See [114] of Foster J’s reasons at first instance.  ?

Google not liable for sponsored links

The High Court has unanimously allowed Google’s appeal from the Full Federal Court’s ruling that Google was liable for misleading or deceptive statements in sponsored links.

According to the Court’s summary (pdf):

The High Court unanimously allowed the appeal. Google did not create the sponsored links that it published or displayed. Ordinary and reasonable users of the Google search engine would have understood that the representations conveyed by the sponsored links were those of the advertisers, and would not have concluded that Google adopted or endorsed the representations. Accordingly, Google did not engage in conduct that was misleading or deceptive.

French CJ, Crennan and Kiefel JJ delivered the principal judgment, Hayne J and Heydon J each delivered separate concurring opinions.

Google Inc v Australian Competition and Consumer Commission [2013] HCA 1

Not a bad way to start off the legal year!

Google v ACCC

Following on from yesterday’s post, @davidstarkoff points out that:

  • the transcript of the special leave application can be found here; and
  • in due course, the submissions will appear here.

The hearing of the appeal has been fixed for 11 September 2012.

ACCC v Google

Apparently, back on 25 June the High Court granted Google special leave to appeal from the Full Federal Court’s ruling that Google is liable for the misleading ads placed by advertisers.

Maybe the internet will be able to keep working in Australia after all.

Austlii is only up to 20 June, at the time of posting.

Lid dip “Law Geek Down Under

Does anyone think Google is advertising the sponsored links?

The Full Federal Court in Australia does.

The ACCC has successfully appealed the Google Adwords case for misleading and deceptive conduct.

So, for example, Alpha Dog Trainging has been operating a dogtraining business for 12 years. Dog Training Australia (Ausdog) bought ads on the keywords Alpha Dog Training through Google’s Adwords program. One ad generated was:

Alpha Dog Training 
DogTrainingAustralia.com.au All Breeds. We come to you. No dog that can’t be trained. 

Instead of being taken through through to Alpha Dog Training’s website, however, a user who clicked on the ad was taken through to Ausdog’s website.

A clear case of misleading or deceptive conduct by Ausdog.

Because of its role in “selecting” which ads got placed in what order, Google has also been found liable.

Prof. King, formerly an ACCC commissioner, highlights why and thinks the Court got it seriously wrong.

Did we just kill the Internet in Australia?

ACCC v Google Inc. [2012] FCAFC 49 (Keane CJ, Jacobson and Lander JJ)