Use of a trade mark on a website as trade mark use in Australia

Authors: Mark William and Tim Golder (Allens Arthur Robinson Patent & Trade Mark Attorneys)

International Hair Cosmetics Group Pty Ltd v International Hair Cosmetics Limited [2011] FCA 339, 8 April 2011

Journal of Intellectual Property Law & Practice (2011), doi: 10.1093/jiplp/jpr096, first published online: 7 July 2011

The Australian Federal Court has confirmed the factors to be considered when determining whether use of a trade mark on an ‘international’ website constitutes use of the trade mark in Australia. The case highlights the difficulties presented in the online environment when a mark is owned by different parties in different jurisdictions.

Legal context

A person infringes a registered trade mark by using as a trade mark a sign that is substantially identical with, or deceptively similar to, the trade mark in relation to goods or services in respect of which the trade mark is registered. In this case, while not strictly an issue of infringement, the Court was required to consider whether use of an identical mark on an ‘international’ website constituted use of the mark in Australia, such as to breach an undertaking provided by the respondent (and in effect, would have constituted a trade mark infringement).

Facts

The applicant in these proceedings, an Australian company, owned Australian trade mark registrations for AFFINAGE and AFFINAGE INFINITI. The first respondent owned the registered mark AFFINAGE in the UK and 20 other countries. The parties entered into an agreement to split the geographical distribution of AFFINAGE products.

Following a mediation arising from separate actions brought by each party against the other in Australian courts in 2010, the parties signed a Deed of Settlement, which included an undertaking by the UK company as follows:

The Respondents undertake not to use AFFINAGE, INFINITI, AFFINAGE INFINITI, or AFFINAGE SALON PROFESSIONAL as a sign in connection with the importation, marketing, sale or manufacture in Australia of hair care products including hair colours and dyes.

In January 2011, the Australian company's solicitor undertook a Google search for ‘Affinage’ and noticed ‘Affinage Salon Professional’ at the website www.affinage.com. Entering the website, the solicitor accessed a landing page in which ‘Affinage’ appeared as a type banner with ‘Salon Professional’ as an added smaller subscript. The page included a ‘country box’. Above the box was the statement ‘Select Australia for information on Australia and Asian Pacific countries’. When the solicitor selected Australia in the country box, he was taken to a page headed ‘ASP’. Under the ‘Profile’ tab was the following statement:

In 1996 [IHC UK] conceived, created and launched the premium hair care brand AFFINAGE. Originated as line of hair colour, the AFFINAGE brand grew rapidly to include [reference to other types of product] … Now we are introducing our exciting new hair care brand, ASP, to the Australian and Asian markets. Having already signed distribution agreements with a number of companies we look forward to fantastic success in 2011.

Under the heading ‘World Class, Worldwide’, the following statement was made:

Today our products are sold in over 50 countries—across Europe, Africa, the United States, South America and the Asia Pacific. Our brands are marketed globally by {IHC UK} and through its associated companies in the USA and Australia. Global distribution is achieved through a worldwide network of wholesalers and specialist distributors.

At the bottom of the page was a map of the world in which the UK was indicated as the ‘Worldwide HQ’ of ASP, ‘ASP USA’ was designated in the USA, and ‘ASP Australia’ was designated on the Australian continent.

Analysis

The Court held that the website breached the undertaking in the Deed of Settlement, and granted an injunction requiring removal of the ASP element of the website at www.affinage.com. The court also found that, despite modifications to the website made by the respondents after the proceedings commenced (whereby ‘Australia’ no longer appeared in the drop-down list for countries under AFFINAGE, but only under ASP), the website still constituted a breach of the undertakings.

The Court considered the elements which determine whether use of a sign of a website constitutes use of the sign in Australia. He drew an analogy between the present case and Ward Group Pty Ltd v Brodie & Stone plc [2005] FCA 471 where Merkel J said:

In summary, the use of a trade mark on the internet, uploaded on a website outside of Australia, without more, is not use by a website proprietor of the mark in each jurisdiction is downloaded. However, … 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 has used the mark in that jurisdiction.

In the present case, there was little doubt that the website was directed at Australian consumers, given the Australia-specific website that was accessed by selecting ‘Australia’ in the country box.

The Court also held that use of the phrase ‘as a sign’ in the undertakings contemplated use of the word AFFINAGE as a trade mark; this use of the word, on both the original and modified website, was more than simply a reference to the history of the products in Australia: it was used as part of the promotion of the goods worldwide, including Australia.

The primary factors that determine whether use of a mark on a website constitutes use in Australia appear to be that the use was specifically directed or targeted at Australian consumers, and that the mark must be downloaded in Australia. This raises two interesting questions.

First, what is the position if the website is directed to Australian consumers but there is no evidence of an Australian purchase? In Ward, evidence of a trap purchase was disregarded as being a purchase with the consent of the trade mark owner. However, in the present case, the Court ignored the fact that the evidence of the download was a downloading by the applicant, and instead focused on the fact that the downloading could occur in Australia. This seems to be a far more reasonable approach: a mark applied to goods in a shop window is use of the mark as a trade mark regardless of whether anyone walks by the window, let alone if anyone is enticed into the shop to make a purchase.

Secondly, what is the position if the website is not directed to Australian consumers, but an online purchase is made in Australia from that website? It is difficult to see why the trade mark owner's intention is relevant, given that the High Court recently said in E & J Gallo Winery v Lion Nathan Australia Pty Limited [2010] HCA 15 that use of a mark in Australia was sufficient to defeat a removal application, even though the trade mark owner had no knowledge that its goods found their way into Australia.

In any event, it is submitted that in such circumstances, the issue of whether the mark has been used in Australia should be decided on the basis of contract formation. In Nordstrom Inc v Starite Distributors Inc [2008] ATMO 11, it was held that use of a mark in Australia (in an online context) could not be demonstrated without specific proof that the goods were ordered from Australia. Proposed changes to the Australian Electronic Transactions Act will create the assumption that, unless clearly indicated to the contrary, an electronic proposal to form a contract (such as an offering of goods on a website) will be considered an invitation to treat. As a result, a contract will be formed in Australia when an online order is placed by a consumer in Australia and the acceptance of the order is confirmed by the website operator. Such formation of a contract should constitute trade in Australia, sufficient to evidence use of the mark in Australia (contrary to the postal acceptance rule which applies to ‘snail mail’ correspondence where the contract would be finalised—and thus the trade completed—in the overseas jurisdiction).

Practical significance

The decision confirms the elements to consider when determining whether a sign used on a website is being used in Australia, and highlights the difficulties faced when a mark is to be used by two or more parties in different jurisdictions. Significantly, it will not be a defence to an allegation of infringement to say that the mark is being used only to refer to an historical position. Such ‘historical’ use of the mark may still constitute infringement if the website does not clearly explain that the reference is purely historical, and that there is no longer a connection between the website owner and the mark in the particular jurisdiction.

The decision serves as a useful reminder to parties who have entered agreements or who plan to make acquisitions which will allow for the use of the same marks by different parties, to ensure that the use of trade marks on websites is addressed in all agreements, and is continually monitored.