Ward Group Pty Ltd v Brodie & Stone Plc [2005] FCA 471 (“Ward”)

Authors: Zeinab Farhat & Gianluca Pecora, Progressive Legal

In Ward, the Federal Court of Australia held, among other things, that where claims of trade mark infringement and passing off are being claimed in relation to foreign based websites, these websites must specifically target Australian customers in order for the allegedly infringing conduct to be considered trade mark infringement and / or passing off for the purposes of Australian law.

NB: At the time of this decision, the Plaintiff retained ownership of the Restoria Mark. In or around 2007, the Restoria Mark was assigned to Come International LLC.  

Facts

Ward Group Pty Ltd (“the Plaintiff”) sold anti-greying products (“the Restoria Products”) under the brand name “Restoria” (“the Restoria Mark”). At the time of this decision, the Plaintiff had registered ownership of the Restoria Mark in Australia.

Brodie & Stone Plc (“the Defendant”) sold the UK version of these products (“the UK Restoria Products”) and had registered ownership of the UK trade mark for the words “Restoria” (“the UK Restoria Mark”). 

The Defendant sold its products to the proprietors of various websites who then sold those products on their internationally accessible websites. These websites which were selling the UK Restoria Products were not specifically targeted at Australians. The Defendant asserted that they were not aware the proprietors would sell the products online.  

The Solicitors of the Plaintiff made “Trap Purchases” of the UK products from the websites to prove that the UK Restoria Products could in fact be bought in Australia. These Trap Purchases were intended to demonstrate use of the Restoria Mark in Australia, by reason of the availability of the UK Restoria Products in Australia.  

The Plaintiff and the website providers came to a settlement without trial to resolve this issue. 

The Plaintiff then sued the Defendant on the assertion that it was a “joint tortfeasor” with the website proprietors. This was on the basis that the Defendant helped the website proprietors to infringe upon the Restoria Mark. To establish this, the Plaintiff had to establish the liability of the website proprietors – despite having already settled with them.

Issues

The Court considered:  

1. whether the advertising constituted a representation in Australia or a use of the  Restoria Mark in Australia; 
2. whether the trap purchases evidenced a passing off or an infringing use of the Restoria Mark in Australia; 
3. whether the making of the trap purchases constituted a consent by the registered proprietor to the use of the Restoria Mark in Australia; and  
4. whether the manufacturer or distributor of the products in the United Kingdom was a joint tortfeasor with the website proprietors in respect of the alleged claims for passing off and trade mark infringement. 

Decision

The Court found in favour of the Defendant and held, inter alia that: 

The website proprietors were telling the truth when offering the UK Restoria products for sale on their website under the Defendant’s brand name;  

Trade mark infringement could not be established by the Restoria Mark being used on the UK websites. This is because although the websites were accessible to Australians, Australian consumers were not specifically targeted by these websites; 

The Trap Purchases were not representative of other purchases by Australian consumers. Hence, by the Plaintiff purchasing the products themselves (through their Solicitors), they had consented to the use of the Restoria Mark in that specific sale.  

Reasoning

Passing Off

The Plaintiff asserted that the website proprietors had passed off the UK Restoria Products as being the Restoria Products. This would be the case if the website proprietors had made it appear as though the UK Restoria Products were the Restoria Products, or, had been endorsed or approved by the Plaintiff. This was not the case here.

Did not target Australians

The Court considered that the website proprietors had listed the UK Restoria Products under the brand name of the Defendant, not the Plaintiff. 

The Court found that the potential misrepresentation was not made to prospective customers or end users of the Plaintiff’s products because the website did not advertise the UK Restoria products to Australian consumers, nor did it target Australian consumers in any other way.

The Court relevantly held the following regarding the targeting of particular consumers:

“…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” per Ward at [43].  

The Court regarded that the international accessibility of the website offering the UK Restoria Products was merely on account of the open design of websites on the internet. In other words, the open accessibility of the site was not demonstrative of an intention to specifically target Australian customers. 

No damage sustained to Plaintiff

The Plaintiff also was unable to prove any actual, nor probable, damage by the potential misrepresentation. No evidence of actual damage was demonstrated via the Australian purchases of the UK Restoria Product, apart from the Trap Purchases.   

The Court also acknowledged that Australian purchases were unlikely given that the UK websites offered significantly more expensive prices than the Restoria Products, especially with international postage fees.  

The Court also found no damage as to reputation, given both the Australian and UK Restoria Products, are of common origin and similar quality and standard. 

Trade Mark infringement

For the Plaintiff to prove trade mark infringement, it was required to, among other things, prove that the Restoria Mark was “used” in Australia by the website proprietors.  

It is important to note that ‘use’ can include any advertising or sales in Australia.

No Advertising in Australia

The Court found that the UK Restoria Products being available to Australians through the website was not enough to establish ‘use’ via communication. 

The Court acknowledged that ordinarily a communication is taken to have occurred when that communication is received. This case was viewed as distinct because although the communication was available to be received by Australians, the website proprietors had not intended to communicate to Australian consumers specifically, nor was there evidence of them having done so successfully. 

The Court also considered the fact that Australia was an option on the list of countries available for delivery on the website via a drop-down menu – including the website converting prices to Australian dollars upon selection of that option. The Court found that this feature of the website was merely an operational accident, evidenced by the website offering all its products to most other countries in the same drop-down menu. There was no specific targeting of Australians that differentiated it from those other countries.

No Sales in Australia

The only evidence of sale to Australians by the website was via the Trap Purchases made by the Plaintiff’s Solicitors. 

By accepting the Trap Purchases, the website proprietors were considered to have intended to ‘use’ the Restoria Mark. In most cases, this behavior would amount to trade mark infringement. However, the Court identified this matter as distinct. In other cases, Trap Purchases indicate that other similar sales were likely to have been made. In this case, the Court found that the Trap Purchase was unlikely to represent any other instances of Australian purchases.

In addition, this specific instance of the Trap Purchase could not be made out as ‘use’ of the Restoria Mark. By being the recipients of the purchase, the Plaintiff had implicitly consented to the use of its mark, in this instance, which negated the asserted trade mark infringement. To this end, it appears as though the Trap Purchases had the opposite effect for which they were intended.  

Key Takeaways from Ward

Trade Mark Use on Foreign Websites

Unless the use of a trade mark is specifically targeting Australians, an Australian trade mark used on a website outside of Australia does not amount to trade mark infringement.

As such, it is important to consider the geographical location where a mark is being used when ascertaining whether its use can be considered trade mark infringement for the purposes of Australian trade mark law. On foreign based websites, it is equally important to consider whether a trade mark is targeting or directing advertising to Australians to purchase the product.

Trap Purchases

Trap Purchases are not definitive evidence of ‘use’ of a trade mark.

They must sufficiently prove that they are representative of other instances of the alleged infringing conduct and not just isolated examples incited by the Plaintiff.

Lessons for Businesses

.au Websites

Australian business should feel legally empowered to take action against infringing .au websites that are hosted overseas. It is likely that such a URL will be taken by Courts to be specifically targeting Australians. To that end, Australian businesses who have registered trade marks will be able to demonstrate sufficient use of the mark despite the hosting of those domains overseas.

Counterfeit Goods on EBay

The online sale of counterfeit goods imitating Australian brands on auction sites, like EBay, may be immune from Australian trade mark law – unless a purchase occurs within Australia. Such cases may unfortunately rely on the competence of overseas jurisdictions to protect Australian businesses.  

However, some protection may be given by Dow Jones & Company v Gutnick (2002) 210 CLR 575 (“Dow”). Dow found an action for defamation could be conducted by Australian Courts, if damage by a foreign defaming website is proven to have occurred to victims in Australia. 

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