Using trade marks on foreign websites


Merkel J has ruled that a UK manufacturer did not infringe Australian trade mark rights when its products were offered for sale on third party, UK websites: Ward Group Pty Ltd v Brodie & Stone plc [2005] FCA 471.

There are at least 3 interesting points: (a) how the Australian and UK trade marks came to be in separate hands, (b) why the use on the UK "shopping" websites was not trade mark infringement or passing off in Australia and (c) why Brodie was not liable.

How the trade marks came to be owned by different people

Ward Group owns the registered trade mark RESTORIA for hair products and cosmetics in Australian and over 70 other countries, but not the UK where it is owned by Brodie.

Ward Group had applied for and registered RESTORIA in the UK in 1963. In 1965, it incorporated a UK subsidiary. In 1970, it sold its UK trade mark to the UK subsidiary and then, in November 1970, it sold its shareholding in the UK subsidiary to outside interests which, by the time of the action, had become Brodie.

Brodie therefore was happily making and selling RESTORIA brand products, of substantially similar quality to Ward Group's, in the UK. Third party websites in the UK were offering Brodie's products for sale along with numerous other products. These third party websites were not affiliated with Brodie in any way (other than offering some of its products for sale) although, after receiving the letter of demand from the Ward Group, Brodie had requested them not to sell its products to Australians.

Some of the UK brand products were offered for sale in an online catalogue where prices were quoted in British pounds or US dollars. A drop down box at "checkout" did feature the usual alphabetical listing of countries including Australia. A search of the website did reveal other UK brand products also being offered for sale where the prices were listed in British pounds, Euros, US dollars and Australian dollars.

When the product was purchased over the internet, the "confirmation" page displayed in the purchaser's browser did not display the word RESTORIA. Most of the confirmation e-mails did not include the word RESTORIA either. In at least some cases, however, e-mails from the dispatcher of the goods (as opposed to the website vendor) did.

Why three was neither trade mark infringement nor passing off

Merkel J dismissed the Ward Group's action against Brodie claiming it was a joint tortfeasor with the websites in trade mark infringement and passing off.

There were two crucial features leading to this result.

First, none of the webistes were specifically targetted or directed at customers in Australia. Rather, the products were bona fide offered to the world at large. Indeed, the only evidence of sales to Australians was the evidence of "trap" purchases made by the Ward Group's solicitors.

On the question of trade mark infringement, his Honour ruled at [37]:

Determining when the website proprietors first used the Restoria mark in Australia is not without difficulty. That issue turns on when the proprietors first advertised for sale or sold UK Restoria products in Australia in a manner that used the Restoria mark. The website proprietors’ advertising on the Internet of products for sale was a marketing of those products to the world at large and I am not satisfied that it was a marketing that was specifically targeted or directed at, or was specifically intended to be acted upon by, consumers in Australia. It is correct that Australia was listed in a "drop down" country box, together with numerous other countries, as a destination to which products may be shipped. Also, on the Westons website, an Australian dollar price was quoted together with other currencies as an indicative conversion price of a number of products. However, I am not satisfied that those circumstances indicated a specific intention that the particular goods in question were being marketed to consumers in Australia in a manner that would differ from the way in which those, and other, goods were being offered to consumers around the world. Rather, the circumstances indicate no more than that the website proprietors expected that there may be potential consumers in Australia, in the same way as they expected that there may be potential customers elsewhere in the world, that might be interested in purchasing any of the products advertised on their websites.

His Honour broadened the point more generally at [43]:

In summary, the use of a trade mark on the Internet, uploaded on a website outside of Australia, without more, is not a use by the website proprietor of the mark in each jurisdiction where the mark is downloaded. However, as explained above, if there is evidence that the use was specifically intended to be made in, or directed or targeted at, a particular jurisdiction then there is likely to be a use in that jurisdiction when the mark is downloaded. Of course, once the website intends to make and makes a specific use of the mark in relation to a particular person or persons in a jurisdiction there will be little difficulty in concluding that the website proprietor used the mark in that jurisdiction when the mark is downloaded.

In reaching this conclusion, Merkel J drew support from, amongst others, the US Zippo case 952 F Supp 1119 (WD Pa 1997), New Zealand Post v Leng [1999] 3 NZLR 219, Merklermedia Corp v DC Congress GmbH [1998] Ch 40 and ACCC v Chen (2003) 132 FCR 309.

His Honour went on to find that the website proprietors did use the trade mark in Australia when they accepted the orders for the trap purchases. These were not infringing uses, however, because being trap purchases they were made with the consent of the trade mark owner and there was no evidence that any other purchases were ever made or likely to be made. Indeed, his Honour found that it would not make economic sense for Australians to buy the UK products at their higher prices and, in addition, pay the delivery charges from the UK. Accordingly, s 123 of the Trade Marks Act 1995 provided a full defence to the website proprietors.

Nor was there any passing off. Merkel J questioned whether the use of the trade mark on the foreign websites conveyed any misrepresentation, but found it unnecessary to decide the point. Instead, his Honour found that the website owners were not passing off as there was no actual or probable damage to the Ward Group - once again, the evidence of sales was limited only to the trap purchases.

Why Brodie was not liable in any event

The second significant factor was that the websites offering the goods for sale were not connected with Brodie.

Merkel J rejected the claim that Brodie was a joint tortfeasor considering that the case was far removed from those where liability had been imposed on a vendor for the actions of another tortfeasor. It was lawfully making and distributing its products in the UK under its registered trade mark. It was not trying to sell its products in Australia or to Australians, nor was it knowingly equipping the website vendors to do so.

The ruling that Brodie was not liable does not seem too controversial in light of cases like CBS v Amstrad or WEA v Hanimex. There may be some instinctive feeling in favour of the ruling that websites offering goods to the world at large do not infringe. Presumably, the rule that damage to the protected reputation is presumed to flow from a passing off did not apply in view of the unlikelihood of there ever being any genuine sales to Australians in Australia. One might get rather nervous, however, contemplating what might happen if exchange rate fluctuations suddenly meant that it became economical to buy the UK product from Australia. All of which goes to show yet another reason why it is not really a very good idea to split ownership of "global" trade marks.

Posted: Monday - 02 May, 2005 at 03:17 PM         |

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