Ward Group Pty Ltd v Brodie & Stone Plc
[2005] FCA 471
FEDERAL COURT OF
AUSTRALIA
MERKEL J:
Introduction
1
The applicant (“the Ward
Group”) is the Australian manufacturer and distributor of anti-greying hair
creams and lotions marketed under the brand name “Restoria” (“the Australian
Restoria products”). The Ward Group claims that similar hair creams and lotions
manufactured and distributed by the respondents in the United Kingdom under the
same brand name (“the UK Restoria products”), which were advertised for sale
and sold on certain websites on the Internet, infringed its trademarks and
passed off the UK Restoria products as and for the Australian Restoria
products.
2
The Ward Group is claiming
declarations and injunctions for trade mark infringement and passing off
against the respondents (referred to compendiously as “Brodie & Stone”) on
the ground that Brodie & Stone is a joint tortfeasor, together with the
owners of the websites (“the website proprietors”), in respect of the alleged
trade mark infringements and passing off. The claims against Brodie & Stone
are based upon it being the manufacturer and distributor in the United Kingdom
of the UK Restoria products that were advertised for sale and sold on the
Internet by the website proprietors.
3
Initially the Ward Group also
sought relief against the website proprietors in respect of trade mark
infringement, passing off and alleged contraventions of ss 52 and 53 of
the Trade Practices Act 1974 (Cth) (“the TPA”). However, after the
settlement of those claims the proceeding was amended by removing the claims
against the website proprietors.
4
Also, during the course of the
hearing the Ward Group withdrew the claims it had made against Brodie &
Stone under the TPA. Those claims, which relied upon s 75B of the TPA,
alleged that Brodie & Stone was “involved” in the alleged contraventions of
ss 52 and 53 of the TPA by the website proprietors. The withdrawal came
about after my decision in Bray v F Hoffman-La Roche Ltd (2002) 118 FCR
1 (“Hoffman-La Roche”) was drawn to the attention of senior counsel for
the Ward Group. In Hoffman-La Roche I stated (at 16-17 [53]-[55]) that
s 75B of the TPA is only applicable to conduct in Australia. The conduct
relied upon in respect of the s 75B claims against Brodie & Stone was
conduct engaged in solely in the United Kingdom.
5
At trial the issues arising for
determination were:
(1) whether the advertising and sale of the UK Restoria products on the Internet by the website proprietors infringed the Ward Group’s Australian trade marks or constituted a passing off of the UK Restoria products as and for the Australian Restoria products of the Ward Group; and, if so
(2)
whether Brodie & Stone, as
the manufacturer and distributor of the UK Restoria products in the United
Kingdom, was liable as a joint tortfeasor in respect of the trade mark
infringements and passing off of the website proprietors.
6
There are two special features
about the claims in the present case. The first is that the advertising of the
UK Restoria products, together with numerous other products, for sale on the
Internet by the website proprietors was not specifically targeted or directed
at customers in Australia. Rather, the advertising targeted potential
purchasers anywhere in the world at large.
7
The second feature is that the
case against Brodie & Stone is not based upon it having sold UK Restoria
products to any of its customers intending or knowing that those goods were to
be advertised for sale or sold by a customer on the Internet. Rather, the case
was based upon the Ward Group informing Brodie & Stone that some of Brodie
& Stone’s customers were selling the UK Restoria products to entities or
individuals who, in turn, were selling UK Restoria products on the Internet,
and that the offering to sell and selling of those products to customers in
Australia on the Internet constituted an infringement of the Ward Group’s
Restoria trade marks in Australia and passing off. The Ward Group contended
that once Brodie & Stone became aware of those matters it was obliged to
place restrictions on the resale of its UK Restoria products, and its failure
to do so made it a joint tortfeasor in respect of the trademark infringements
and passing off alleged against the website proprietors.
8
Plainly, the Ward Group’s
claims, if upheld, can have significant consequences for the sale of goods on
the Internet.
Background
9
The Ward Group manufactures and
distributes the Australian Restoria products in Australia and elsewhere under
the brand name “Restoria”. It is registered under the Trade Marks 1995
(Cth) (“the TMA”) as the proprietor of four trade marks bearing the mark
“RESTORIA” in the class concerned with hair products and cosmetics (“the
Australian Restoria marks”). It is also the registered proprietor of Restoria
trade marks in over 70 other countries, but not in the United Kingdom.
10
The Ward Group has manufactured, advertised,
marketed, distributed and sold the Australian Restoria products in Australia
since its incorporation in 1957. It began exporting the products in 1965 and
conducts a wide and extensive trade worldwide, although not in the United
Kingdom, in the Australian Restoria products. It is clear that the Ward Group
has established a substantial reputation and goodwill in relation to the
Australian Restoria products and their brand name, Restoria.
11
Each of the respondents is
incorporated in the United Kingdom. The first respondent, Brodie & Stone
Plc, previously manufactured and distributed an anti-grey hair cream and lotion
under the mark “RESTORIA” and had the right to use the United Kingdom trade
mark “RESTORIA” (“the UK Restoria mark”) although it was not the registered
proprietor. In April 1999, the first respondent’s business, including the sale
of UK Restoria products, was transferred to the second respondent, Brodie &
Stone International Plc, which is a related body corporate. The third
respondent, Brodie & Stone Holdings Plc, which is the first and second
respondents’ holding company, conducts the business of Brodie & Stone and
became the registered proprietor of the UK Restoria mark in November 1999.
12
Initially the Ward Group was
the sole proprietor of the Restoria mark. However, in 1963 the Ward Group
applied to register the Restoria mark in the United Kingdom, and in 1965 the
shareholders and directors of the Ward Group incorporated the United Kingdom
company, Ward Laboratories (UK) Ltd, in order to manufacture and sell Restoria
products in the United Kingdom. In 1970 the Ward Group assigned the UK Restoria
mark to Ward Laboratories (UK) Ltd. In November 1970 the shareholding in, and
business of, the UK Ward Group company were sold to outside interests, which
took an assignment of the UK Restoria mark and continued to sell the UK
Restoria products. Brodie & Stone is the current registered proprietor of
the UK Restoria mark and owns the business previously carried on by the UK Ward
Group company. In the result, ownership of the Restoria mark was split between
Australia, where the Ward Group is the registered proprietor of the Australian
Restoria marks, and the United Kingdom, where Brodie & Stone is the
registered proprietor of the UK Restoria mark.
13
Brodie & Stone sells the UK
Restoria products to retailers and wholesalers in the United Kingdom. However,
it appears that one or more of the wholesalers have, in turn, sold or agreed to
sell the UK Restoria products to the website proprietors who advertised those,
and other, products for sale on the Internet.
14
Although there are some
differences in the UK and the Australian Restoria products, and in their
packaging, it is not suggested that the products differ in any significant
respects. Rather, it appears that the UK Restoria products were derived from
the original Restoria products, which were marketed in both the United Kingdom
and Australia by the Ward Group and its United Kingdom subsidiary.
Selling
the UK Restoria products on the Internet
15
In Dow Jones & Company
Inc v Gutnick (2002) 210 CLR 575 (“Dow Jones v Gutnick”) (at 597-598
[15]-[16]) Gleeson CJ, McHugh, Gummow and Hayne JJ explained how the
Internet works:
“The World Wide Web
is but one particular service available over the Internet. It enables a
document to be stored in such a way on one computer connected to the Internet
that a person using another computer connected to the Internet can request and
receive a copy of the document. As Dr Clarke said, the terms conventionally
used to refer to the materials that are transmitted in this way are a
‘document’ or a ‘web page’ and a collection of web pages is usually referred to
as a ‘web site.’ A computer that makes documents available runs software that
is referred to as a ‘web server’; a computer that requests and receives
documents runs software that is referred to as a ‘web browser’.
The originator of a
document wishing to make it available on the World Wide Web arranges for it to
be placed in a storage area managed by a web server. This process is
conventionally referred to as ‘uploading’. A person wishing to have access to
that document must issue a request to the relevant server nominating the
location of the web page identified by its ‘uniform resource locator (URL)’. When
the server delivers the document in response to the request the process is
conventionally referred to as ‘downloading’.”
16
Marc Phillips gave evidence in
relation to the sale of products over the Internet. He stated that most people
use search engines in order to locate products and services on the Internet. Search
engines and directories may be located outside of Australia and will most often
produce different results and varied listings in response to a search for a
particular term, such as in this case, Restoria. Even though it may be possible
for users to limit the search by location or to filter the search results for
the country in which the website is located, people do not usually search in
that manner. In the usual course persons searching in Australia for a
particular product on the Internet are likely to obtain search results for web
pages located around the world. For example, a person searching for Restoria
products may carry out a Google or Yahoo search on the Internet which will
reveal, inter alia, the websites, including the Ward Group sites, that
advertise those products under the Restoria name.
17
The UK Restoria products were
advertised for sale on three websites (www.westons.com,www.beauty4you.co.uk, andwww.auravita.com (“the websites”)), which were
owned or operated by one or other of the website proprietors. There was also
evidence that the UK Restoria products were advertised for sale on two other
websites but that evidence was not relevant to, or admitted in respect of, the
claims made against the website proprietors. Rather, it merely established that
UK Restoria products continued to be available for purchase on the Internet on
the two sites (www.owlpharmacy.co.uk and www.carterandbond.com).
18
The process of purchasing the
UK Restoria products and any of the other numerous products advertised for sale
on the websites operated by the website proprietors, can generally be described
as follows. First, a potential purchaser accesses the website and browses the
online catalogue or online store for the products advertised on the website. When
that person wishes to purchase any of the advertised products it can be marked
and once the browsing is completed, the purchaser is directed to a new web
page, similar to an invoice, that lists the products selected by the purchaser.
The page typically shows the products selected, their price and requests the
consumer to enter payment details (eg. credit card details), and a postage and
email address. Payment may be made using a secure payment service operated by a
third party website. The above process takes place as a result of the
purchaser’s downloading, which occurs without the intervention or knowledge of
the website proprietor.
19
After the order has been placed
the website confirms the order. The confirmation may be made by directing the
purchaser to a web page that confirms the order. The confirmation is by the
provision of a receipt number and usually indicates the period in which the
delivery will be made. Confirmation may also be made by email sent to the
purchaser in similar terms. On some occasions both forms of confirmation are
used. The products are then sent to the purchaser by ship or post.
20
The only evidence of sales of
the UK Restoria products in Australia is the evidence adduced by the Ward Group
of purchases of those products by its solicitors acting on its behalf (“the
trap purchases”). In each instance the website was uploaded by one of the
website proprietors in the UK and the purchaser downloaded the website in
Australia and placed an order for the UK Restoria products in the manner
described above. One of the purchases was made using www.westons.com (“the Westons website”). The
search engine requested the user to enter search terms and then responded to a
search for “Restoria” by providing a list of web addresses that contained the
word “Restoria”. The trap purchaser then clicked on the hyperlink to the
website the purchaser wished to access.
21
The trap purchaser downloaded
the Westons site and, consequently, was able to browse an “online catalogue”
showing an extensive range of products from a wide range of manufacturers. The
online catalogue included Restoria Hair Lotion, with an accompanying price in
British pounds and US dollars. The trap purchaser selected “Add to Shopping
Cart” to choose the Restoria Hair Lotion and was then afforded the opportunity
to “Checkout”.
22
At the “Checkout” a list of the
products selected by the trap purchaser appeared under the heading “Shopping
Cart”, and beside each product purchased was its price. The web page displayed
the price in British pounds but a US dollar amount appeared in brackets,
presumably as an indication of the conversion price. The Checkout also
contained a heading “Select Shipping Destination” and provided a “drop down”
country box containing a list of various countries, including Australia, for
the consumer to select as a shipping destination. The purchaser then gave
details of the invoice address and class of service for shipping and handling. The
trap purchaser filled out an online form indicating where the bill was to be
sent and the payment information. A confirmation of payment was sent by
Netbanx, together with a receipt number, but the word “Restoria” did not appear
on that receipt.
23
The Restoria Hairdressing Cream
was not listed on the Westons online catalogue. However, the trap purchaser was
able to select the Restoria Hairdressing cream under that name from the Westons
site on a different page containing a “Complete product listing”. The complete
product listing web page showed all the products available on the Westons site
in alphabetical order, and beside each product the price was listed in British
pounds, Euros, US dollars and Australian dollars. The ordering procedure was
similar to the online catalogue, that is the purchaser added the products that
it wished to purchase to a “shopping cart”, a new web page listed the items
selected and then a new web page requested the purchaser to fill out an online
order form which requested a mailing address and payment details. A web page
was then displayed confirming the receipt of the order, giving a receipt number
and informing the purchaser of the time frame in which to expect delivery of
the product. On the confirmation page, the fine print says “All orders accepted
according to our standard terms and conditions.” The confirmation page did not
use the word “Restoria”. The UK Restoria products were ordered on the Westons
site on 19 July 2001 but were not delivered to the trap purchaser.
24
The trap purchaser who
downloaded www.beauty4you.co.uk (“the Beauty4you
website”) did not state whether a search engine was used to locate the
Beauty4you site. The Restoria cream was listed for sale on the Beauty4you site
in British pounds, and in order to place an order the trap purchaser used a
third party secure payment site and filled in an online form that listed the
price of goods (in British pounds) and requested the trap purchaser’s credit
card details and delivery address. Once payment was made the trap purchaser was
directed to a web page that confirmed payment and gave a receipt number. The
trap purchaser received email confirmations of both the payment and the
dispatch of the goods from the secure payment service, Liquid Design
(presumably the dispatcher of the goods) and the Beauty4you website. Emails
from the dispatcher contained the word “Restoria”, but the emails from
Beauty4you did not. The Restoria creams were subsequently delivered to the trap
purchaser without any invoice or documentation.
25
The trap purchaser who
downloaded www.auravita.com (“the Auravita website”)
did not state whether he used a search engine to locate the address of the
Auravita website. After selecting the Restoria cream, the trap purchaser was
directed to a web page that asked for his delivery address, delivery method and
payment details. The UK Restoria product was listed on the web page in British
pounds. Once those details were submitted, the trap purchaser was directed to a
web page that confirmed the purchase and gave an ‘order reference number’ and
the amount of the purchase. An email confirmation was sent to the trap
purchaser from Auravita, without mention of the word “Restoria”, and the goods
were subsequently delivered. The delivery contained a compliments slip and an
invoice containing the word “Restoria”.
26
There was some controversy
between the parties about the trap purchases. As was pointed out by Farwell J
in CC Wakefield & Co Ld v Purser (1934) 51 RPC 167 at 171:
“Test orders or, as
the Defendant prefers to call them, trap orders are in a case of this kind, it
seems to me, quite essential. I fail to see how the Plaintiffs can safeguard
themselves or the public without having resort to some such method of testing
the matter as is used in the present case; but, trap orders or test orders,
whichever they may be called, are scrutinised by the Courts with some jealousy
and rightly so because, if, as a result of a trap order or a test order, a
person is to be charged with the very serious offence of fraudulently
misrepresenting the goods which he is supplying to the public, to the detriment
of the public as well as of the Plaintiffs, the Court must be satisfied that
the offence has been proved strictly. Further, if a person is resorting to a
test order or a trap order, even in a case of this kind, where the necessity
for such a device may be a real one, that person is bound to carry out the
proceeding with the utmost fairness to the prospective defendant to the action.
It is essential, if the plaintiff is to succeed in the action which he
ultimately brings, that he should be able to satisfy the Court that he has
acted throughout with the most exact fairness to the defendant and has given
him every reasonable chance of investigating the matter for himself, so that he
may be in a position to put forward in the action, if one follows, any and
every defence properly open to him.”
27
In the present case the trap
purchases made on behalf of the Ward Group by its solicitors undoubtedly
satisfied the criteria laid down by Farwell J. Nonetheless, Brodie & Stone
contended that the trap purchases might convey a misleading impression. It was
contended that because Restoria products are available from a large number of
retail outlets in Australia and on the Ward Group’s websites, it is unlikely
that Australian consumers would seek out or become aware of the UK websites
offering the UK Restoria products for sale. It was also contended that, even if
a consumer in Australia became aware of the websites offering the UK Restoria
products, it would make little economic sense for the consumer to purchase the
UK Restoria products from the website proprietors at higher prices and higher postage
costs than those applicable to the Australian Restoria products available for
purchase either on the Ward Group’s Australian websites or at retail outlets in
Australia.
28
There was no evidence of any
sales of the UK Restoria products in Australia apart from the trap purchases. Also,
although the UK Restoria products continue to be available for sale on the
Internet there is no reason to expect that sales in Australia were likely to
occur. In that regard it is not disputed that it would be more expensive to
purchase the UK Restoria products rather than their Australian counterparts. That
is of some significance given that the Ward Group has accepted that “this is
not a case where there are material differences in quality or standard” between
the UK and the Australian Restoria products. In my view the evidence
establishes that both contentions of Brodie & Stone were correct and should
be accepted. Of course, the acceptance of those contentions does not diminish
the value of the trap purchases as evidence in support of the passing off and
trade mark infringement claims of the Ward Group.
Passing
Off
29
In Erven Warnink Besloten
Vennootschap v Townend & Sons (Hull) Ltd [1979] AC 731 at 742
Lord Diplock stated:
“My Lords, A.G. Spalding & Bros. V. A.W.
Gamage Ltd., 84 L.J. Ch. 449 and the later cases
make it possible to identify five characteristics which must be present in
order to create a valid cause of action for passing off: (1) a
misrepresentation (2) made by a trader in the course of trade, (3) to prospective
customers of his or ultimate consumers of goods or services supplied by him,
(4) which is calculated to injure the business or goodwill of another trader
(in the sense that this is a reasonably foreseeable consequence) and (5) which
causes actual damage to a business or goodwill of the trader by whom the action
is brought or (in a quia timet action) will probably do so.”
30
Lord Diplock’s statement of
principle has been adopted in Australia: see Moorgate Tobacco Co Limited v
Philip Morris Limited (No 2) (1984) 156 CLR 414 (“Moorgate Tobacco”)
per Deane J at 443-445 and ConAgra Inc v McCain Foods (Aust) Pty Ltd
(1992) 33 FCR 302 at 308-310 per Lockhart J and Betta Foods Australia
Pty Ltd v Betta Fruit Bars Pty Ltd (1998) ATPR 41-624 per Goldberg J
at 40,839-40,840.
31
The misrepresentation pleaded
by the Ward Group is that the website proprietors passed off their businesses
and products as and for the Ward Group’s businesses and products, or as
businesses or products endorsed or approved by the Ward Group. Although no such
representation was expressly made by the website proprietors, the
representation is said to be implied by the advertising and sale on the
Internet by the website proprietors of the UK Restoria products under the
Restoria brand name.
32
The representation expressly
made by the website proprietors was that they were advertising the UK Restoria
products for sale under their established brand name on the Internet. That was
an accurate representation which, in the present context, only became capable
of being a misrepresentation once the UK Restoria products were advertised for
sale in Australia where the brand name Restoria had a repute and
goodwill associated with the Ward Group. If Australian consumers had been
targeted by the website proprietors for the marketing and sale of the UK
Restoria products under the Restoria name, the fact that the representation,
when made in the United Kingdom, was accurate would probably not save it
from becoming a misrepresentation when the representation was made and received
in Australia. The reason for that conclusion is that the cases to which
I later refer (at [38]-[40]) treat such a representation as being made to and
received by consumers in Australia, rather than a representation made to the
world at large.
33
But that is not what occurred
in the present case. Rather, the website proprietors did not target or direct
their advertising at Australian consumers. The only specific representations
made in relation to the UK Restoria products by the website proprietors in
Australia were the representations made in the course of the trap purchases. Having
regard to the circumstances leading to the trap purchases but, in particular,
to the fact that those purchases arose as a result of a bona fide
worldwide offering by the website proprietors in the United Kingdom of the UK
Restoria products, the representation ultimately made by the website
proprietors in Australia, albeit unintentionally, can probably be treated as no
more than a representation that the UK Restoria products had “their origins in
the manufacturer of the well known goods” (which in the Australian context
meant the manufacturer of the Australian Restoria products), which is a common
assumption in passing off cases: see Taco Company of Australia Inc v Taco Bell
Pty Ltd (1982) 42 ALR 177 (“Taco Bell”) at 200 and Revlon Inc v
Cripps & Lee Ltd [1980] FSR 85 (“Revlon Inc”) at 102-104. But,
as explained above, that was not necessarily a false representation because the
UK Restoria products had “their origins” in the Australian Restoria products
sold since 1957 by the Ward Group.
34
There is also an additional
issue arising from the fact that the trap purchasers, being the persons who
procured the representations to be made in Australia and being the only persons
in Australia to whom the representations were specifically directed, were well
aware that the Restoria mark used on the websites was, and was intended to be,
related to the UK Restoria products and not the Australian Restoria products. In
the context of a passing off claim that circumstance might make the present
case distinguishable from Star Micronics Pty Ltd v Five Star Computers Pty
Ltd (1990) 18 IPR 225 at 237 where Davies J stated that a
representation to a trap purchaser was misleading conduct notwithstanding that
the purchaser was aware of the true facts.
35
However, I need not finally
decide these issues as I am satisfied that the Ward Group has failed to
establish the fifth characteristic referred to by Lord Diplock, which
requires the party seeking relief in a passing off action to establish some
actual or probable damage: see Taco Bell at 196. In the present case the
trap purchases were the only sales able to be established on the evidence.
However, and importantly, the evidence also established that it was most
unlikely that anyone else in Australia had searched on the Internet for, and
then purchased, the UK Restoria products instead of, or in preference to, the
Australian Restoria products. I would add that, as the UK and Australian
Restoria products have a common origin and are not materially different in
quality or standard, any sale of UK Restoria products in Australia is unlikely
to harm the goodwill attaching to the Australian Restoria products. In that
regard the circumstances of the present case may be analogous to those
considered in Revlon Inc at 102-104. In any event, the issue of actual
or probable damage is a question of fact and I am not satisfied that the Ward
Group has established that any representations made by the website proprietors,
or any other conduct engaged in by them, has caused actual damage to the Ward
Group or will probably do so. Thus, I am not satisfied that the Ward Group has
made out its cause of action in passing off against the website proprietors.
Trade
mark Infringement
36
Section 120(1) of the TMA
provides that a person infringes a registered trade mark if the person uses 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. A trade mark is used when the mark has been used
in Australia in an advertisement or offering for sale of the goods, even prior
to any actual trade or dealing in the goods under that mark: see Moorgate
Tobacco at 443-445 and Malibu Boats West Inc v Cantonese (2000) 180
ALR 119 at 128 [27]. Thus, a cause of action based on trade mark infringement
focuses on the conduct of the defendant that is alleged to constitute the
infringing use of the mark in Australia.
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.
38
In Hoffman-La Roche at
45 [145]-[146] I considered the question of when a statement originating
outside of Australia is made and received in Australia:
“In a different
context, Mason CJ, Deane, Dawson and Gaudron JJ in Voth v Manildra Flour Mills Pty Ltd
(1990) 171 CLR 538 observed at 567-568:
‘In some cases an act passes across space or time
before it is completed. Communicating by letter, telephone, telex and the like
provide examples.’
However, after also
observing that generally the tort of negligent misstatement is committed where
the statement is received and acted upon their Honours pointed out that the
statement may be received in one place and acted upon in another. They stated:
‘If a statement is directed from one place to
another place where it is known or even anticipated that it will be received by
the plaintiff, there is no difficulty in saying that the statement was, in
substance, made at the place to which it was directed, whether or not it is
there acted upon.’
See also Sydbank Soenderjylland A/S v Bannerton Holdings Pty Ltd
(1996) 68 FCR 539 at 547-548 and Diamond
v Bank of London and Montreal Ltd [1979] 1 QB 333 at
345-346. This principle has been applied to conduct found to contravene
Pt V of the TPA: see No
1 Raberem Pty Ltd v Monroe Schneider Associates Inc
(unreported, Federal Court, No G10 of 1989, von Doussa J, 8
February 1991).”
39
In Norbert Steinhardt &
Son Limited v Meth (1961) 105 CLR 440 at 442 Fullagar J stated that a
groundless threat of patent infringement “is to be regarded as made at the time
when, and at the place where, it is received by the person to whom it is
addressed”. In that case, a letter containing the relevant threats was written
in the USA and received in England, and his Honour found that the threats were
made in England.
40
A similar approach has been
taken in relation to publications or statements made on the Internet. When such
publications or statements are made to the world at large, and not to persons
or subscribers in a particular jurisdiction, there is some difficulty in
regarding them as having been made by a website in a particular jurisdiction. However,
where the publication or statement is directed or targeted at persons or
subscribers in a particular jurisdiction there is no difficulty in treating
them as having been made and received in that jurisdiction: see Zippo
Manufacturing Company v Zippo Dot Com Inc 952 F Supp 1119 (WD Pa 1997) at
1125-1127, New Zealand Post Ltd v Leng [1999] 3 NZLR 219 at 225 and
230-231 and Mecklermedia Corp v DC Congress GmbH [1998] Ch 40 at 51-52. That
question arose in Australian Competition and Consumer Commission v Chen (2003)
132 FCR 309 (“Chen”), which concerned false representations of an
association or connection between certain American websites (which used the
name of the Sydney Opera House) and the Sydney Opera House, which were intended
to be made to, and were directed at, Australian consumers. The representations
were found to have been made in Australia by the website proprietors when the
intended downloading in Australia occurred.
41
On the facts of the present
case the first occasion on which the website proprietors would be considered to
have intended to use and used the Restoria mark in Australia was when
they accepted the orders placed by the trap purchasers in respect of the UK
Restoria products in terms that used the Restoria mark. The reason I have
arrived at that conclusion is that prior to that time the trap purchasers were
downloading a representation made on the Internet to the world at large, and
not a representation intended to be made to, or directed or targeted at, them
in Australia. Thus, I do not accept the contention made by the Ward Group that
the use of the Restoria mark by the website proprietors on the Internet,
without more, was a use of the mark by them in Australia.
42
Although Dow Jones v Gutnick
was relied upon by the Ward Group, that case was concerned with whether an
alleged defamation published on the Internet, which was downloaded by
subscribers to that publication in Victoria, occurred in Victoria. Unlike the
present case, where the focus is on when the website proprietors’ infringing
use of the Restoria mark occurred in Australia, the focus of the alleged
defamation was on where the damage to reputation occurred: see Dow Jones v
Gutnick at 606-608. As the allegedly defamatory publication was made
available to subscribers in Victoria on the Internet, no issue arose about the
publication of that material in Victoria. Therefore that case is of no
assistance to the Ward Group.
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.
44
The first occasion on which
there would have been a specific use of the Restoria mark by the website
proprietors in Australia was when the trap purchasers were informed in
Australia that their order had been accepted, in terms that used the Restoria
name when referring to the UK Restoria product. In this case the confirmation
web pages and emails that were downloaded by the trap purchasers did not refer
to the Restoria mark. However, I am prepared to assume that the downloading of
the acceptance of the order involved an implicit use of the Restoria mark by
the website proprietor. There was also a further use of the mark in Australia
by the website proprietors when the UK Restoria products were delivered by them
to the trap purchasers in Australia. Both uses were uses of the mark in
Australia that fall within the terms of s 120(1).
45
The real issue is whether those
uses of the marks in Australia as a result of the trap purchases, which were
made or procured to be made by or on behalf of the registered proprietor of the
Australia Restoria marks, do not constitute an infringement pursuant to
s 120(1) of the TMA by reason of any of the exculpatory provisions in the
TMA.
46
Section 7(3) of the TMA
provides that infringement does not occur where the use of the mark is an
“authorised use”, as such a use is treated as a use of the mark by the owner. Under
ss 8(1) and (2) of the TMA an authorised use requires that the “user use
the mark under the control of the owner of the trade mark”. By procuring the
use of the Australian Restoria mark in Australia through the trap purchases the
Ward Group was arguably in a position to exercise some control over the use of
the mark in Australia. However, that control would appear to fall short of the
website proprietors using the mark in Australia under the control of the Ward
Group for the purposes of ss 7 and 8 of the TMA.
47
Section 123(1) provides that,
in spite of s 120(1), infringement does not occur when a mark has been
applied to, or in relation to, the goods by, or with the consent of, the
registered proprietor. Section 9 of the TMA provides:
“(1) For the purposes of this Act:
(a) a trade mark
is taken to be applied to any goods, material or thing if it is
woven in, impressed on, worked into, or affixed or annexed to, the goods,
material or thing; and
(b) a trade mark
is taken to be applied in relation to goods or services:
(i) if it is applied to any covering,
document, label,
reel or thing in or with which the goods are, or are intended to be, dealt with
or provided in the course of trade; or
(ii)
if it is used in a manner likely to
lead persons
to believe that it refers to, describes or designates the goods or services;
and
(c) a trade mark
is taken also to be applied in relation to goods or services if
it is used:
(i) on a signboard
or in an advertisement (including a televised advertisement); or
(ii) in an invoice, wine list, catalogue,
business letter, business paper, price list or other commercial document;
and
goods are delivered, or services provided (as the case may be) to a person
following a request or order made by referring to the trade mark
as so used.
(2) In subparagraph (1)(b)(i):
‘covering’
includes packaging, frame, wrapper, container, stopper, lid or cap.
‘label’
includes a band or ticket.”
48
In Transport Tyre Sales Pty
Ltd v Montana Tyres Rims & Tubes Pty Ltd (1999) 162 ALR 175 at 191 [89]
the Full Court made it clear in respect of the predecessor to s 9 that an
application of a mark relates to “the physical manifestation of the trade
mark”. Thus, the question is whether the Ward Group consented to the
application of the mark, in the sense of use of its physical manifestation, in
Australia by the website proprietors.
49
Of course, the Ward Group has
not consented to the application of the mark by the website proprietors when
they advertised the UK Restoria products on the Internet. But I have found that
such an application is not an infringing use of the mark. The application that
I have found to be a use that falls within the terms of s 120(1) was the
website proprietors’ use of the mark in accepting the Ward Group’s trap order
to purchase the UK Restoria products and in the course of selling and
delivering those products pursuant to the trap purchases.
50
However, the trap purchases
involved the Ward Group’s solicitors, acting on behalf of the Ward Group,
downloading the relevant representations in Australia and then procuring the
trap purchases and the delivery of the UK Restoria products in Australia. Brodie
& Stone contended that, in those circumstances, “it is difficult to say the
Ward Group is not consenting to what it itself does”: see Re Wilmer’s
Trusts; Wingfield v Moore [1910] 2 Ch 111 at 119. Brodie & Stone
contends that each act of the website proprietors that constituted a use by
them of the mark was procured by the Ward Group and that, but for that
procuration, the infringing use would not have occurred. It is said that that
amounts to a consent to the infringing use.
51
The Ward Group’s riposte is
that trap purchases have never been regarded as a consent by the trap purchaser
to the infringing use. Rather, they are often a necessary step to establish that
use. Both contentions can be accepted. The reason, however, why trap purchases
are not generally considered a consent to infringing use is that the infringing
conduct is usually already occurring when the goods bearing the infringing mark
are advertised or offered for sale to the public in the jurisdiction. In
that situation the trap purchase is made to establish that fact, and cannot be
seen to be a consent to the infringements that are occurring.
52
However, a quite different
situation would arise when goods bearing the mark are being offered for sale by
an overseas vendor to the world at large and a trap purchase is made by a
purchaser in Australia, who not only procures the sale and delivery of the
goods in Australia but also procures the sole use of the infringing mark by the
overseas vendor in Australia. In that situation, but for the trap purchase, no
use of the mark in Australia would have occurred. In those circumstances it
would be difficult for the trap purchaser, whose conduct was the sole cause of
the use of the infringing mark in Australia, to contend that it has not
consented to that use.
53
In my view the present case is
not, relevantly, distinguishable from the latter of the two situations
described above. The only occasion on which a physical manifestation of the
Restoria mark occurred in Australia as a result of conduct of the website
proprietors was when the Ward Group’s trap order was confirmed and its trap
purchase (including delivery) was made. Thus, the Ward Group procured the sole
use of the infringing mark by the foreign website proprietors and, but for the
trap purchases, no such use would have occurred. In those circumstances the
conduct of the Ward Group is to be taken to involve an implicit, if not an
explicit, consent to the infringing use.
54
It follows that I am satisfied
that the use of the mark by the website proprietors in the course of the trap
purchases is conduct which falls within s 9 of the TMA and that, as that
conduct has been consented to by the Ward Group, that use was not an infringing
use under s 120(1) by reason of s 123(1) of the TMA. Thus, the TMA
infringement claims against the website proprietors must also fail.
Joint
Tortfeasors
55
As I have found that the Ward
Group has not made out its claims of passing off and TMA infringement against
the website proprietors, its case that Brodie & Stone is a joint tortfeasor
with the website proprietors in respect of those claims must also fail. However,
as I am satisfied that the joint tortfeasor claims in respect of both passing
off and trade mark infringement of the Ward Group must fail in any event, it is
appropriate to set out my reasons for arriving at that conclusion in respect of
both causes of action.
56
The liability of a joint
tortfeasor was considered by the High Court in Thompson v Australian Capital
Television Pty Limited (1996) 186 CLR 574 (“Thompson”). Brennan CJ,
Dawson J and Toohey J observed (at 580-581):
“The difference
between joint tortfeasors and several tortfeasors is that the former are
responsible for the same tort whereas the latter are responsible only for the
same damage. As was said in The ‘Koursk’, for there to be joint tortfeasors ‘there must be a
concurrence in the act or acts causing damage, not merely a coincidence of
separate acts which by their conjoined effect cause damage’. Principal and
agent may be joint tortfeasors where the agent commits a tort on behalf of the
principal, as master and servant may be where the servant commits a tort in the
course of employment. Persons who breach a joint duty may also be joint
tortfeasors. Otherwise, to constitute joint tortfeasors two or more
persons must act in concert in committing the tort.”
57
Gummow J observed (at
600):
“In England,
Australia and New Zealand, criteria for the identification of joint tortfeasors
are to be found in expressions used in The
‘Koursk’. Scrutton LJ there spoke of ‘two
persons who agree on common action, in the course of, and to further which, one
of them commits a tort’, saying that in such a case there is one tort committed
by one of them ‘in concert with another’. Sargant LJ accepted the proposition
that persons are joint tortfeasors when their ‘respective shares in the
commission of the tort are done in furtherance of a common design’ so that
those who ‘aid or counsel, direct, or join’ in commission of the tort are joint
tortfeasors.”
58
In Thompson the
respondents, which operated television stations, were found to be joint
tortfeasors in a defamation action because the publication in question was the
result of them having acted in concert to achieve a common end which, in that
case, was a common commercial benefit. Gummow J (at 601) contrasted that
situation with that considered by the House of Lords in CBS Songs Ltd v
Amstrad Consumer Electronics PLC [1988] AC 1013 (“CBS Songs”). Gummow J
stated (at 601-602):
“The situation thus
disclosed may be contrasted with that considered by the House of Lords in CBS Songs Ltd v Amstrad Plc. The plaintiffs were owners of copyright in sound
recordings and musical works. They claimed that the defendants, by
manufacturing, advertising and offering for sale equipment for transferring the
material on prerecorded cassettes to blank tapes, were joint tortfeasors with
such members of the public who used the equipment to infringe their copyrights.
After referring to the use by Scrutton LJ of the phrase ‘in furtherance of a
common design’ in The ‘Koursk’, Lord Templeman continued:
‘My Lords, joint infringers are two or more persons
who act in concert with one another pursuant to a common design in the
infringement. In the present case there was no common design. Amstrad sold a
machine and the purchaser or the operator of the machine decided the purpose
for which the machine should from time to time be used. The machine was capable
of being used for lawful or unlawful purposes. All recording machines and many
other machines are capable of being used for unlawful purposes but
manufacturers and retailers are not joint infringers if purchasers choose to
break the law.’”
59
In the passage from CBS Songs cited above, Lord Templeman succinctly made the point that a
manufacturer and distributor of products is not a joint infringer or tortfeasor
merely because a purchaser of those products uses them to engage in conduct,
such as passing off or trade mark infringement, that is unlawful. The same
point was made by Falconer J in Cadbury Limited v Ulmer GmbH [1998]
FSR 385, a case similar to the present case insofar as it concerned a
manufacturer which did not sell directly to the ultimate retailers of the
goods, with whom the manufacturer was said to be jointly liable. His Lordship
found (at 396-404) that a vendor would not be rendered a tortfeasor for the
mere sale in the ordinary course of business of goods which the vendor was
lawfully entitled to sell, because such a sale could not render the vendor a
joint tortfeasor merely because the purchaser might have subsequently used the
goods in an unlawful manner, and that is so notwithstanding that the vendor may
have known that the goods would be used in that manner.
60
Of course, a different
situation would arise if the vendor was equipped with, or was intending to
equip a purchaser with, the goods in question as an “instrument” or “badge” of
fraud or deception. In such cases, if a court is satisfied that the intention
and purpose of the vendor in providing the goods in question was to enable
another to engage in fraud or deception in relation to the goods, the vendor is
likely to be found to be a joint tortfeasor with that other person: see British
Telecommunications PLC v One in a Million Ltd [1999] FSR 1 at 13-16 and the
cases there referred to. One of those cases was Lever v Goodwin (1887) 4
RPC 492 in which Chitty J (at 498) discussed the passing off cases in
which the manufacturer sells goods that do not deceive the retail buyers, but
which are in themselves capable of being a fraudulent device because, by their
get up, the goods are capable of making a false representation to consumers. His
Lordship posed the relevant question (at 498) to be: “Have the Defendants in this
case, or not, knowingly put into the hands of the shopman, who is more
or less scrupulous or unscrupulous, the means of deceiving the ultimate
purchaser?” [Emphasis added].
61
However, the present case is
far removed from the cases in which a vendor was found to be liable as a joint
tortfeasor because the vendor has acted in concert or pursuant to a common
design with a tortfeasor. Brodie & Stone lawfully manufactured and
distributed the UK Restoria products under its registered trade mark in the
United Kingdom and, in doing so, relied upon the goodwill and repute of the UK
Restoria mark. It formed no part of Brodie & Stone’s intention or purpose
in manufacturing and distributing the UK Restoria products that those products
be offered for sale, or be sold and delivered, in Australia in a manner that
was likely to lead to the trade mark infringements and passing off alleged by
the Ward Group. Thus, Brodie & Stone did not knowingly or otherwise equip,
or intend to equip, any purchaser from it with an “instrument” or “badge” of
fraud or deception.
62
The Ward Group relied upon the
fact that Brodie & Stone had informed its customers of the Ward Group’s
allegation that the on-selling of the UK Restoria products in Australia was an
infringement of the Australian Restoria marks and constituted passing off. The
Ward Group also relied on a recent alteration to Brodie & Stone’s
conditions of sale which restricted the on-sale of its products. The taking of
those steps by Brodie & Stone cannot be determinative of whether Brodie
& Stone was obliged, as a matter of law, to take those steps, failing which
it would be a joint tortfeasor in respect of the online sale by the website
proprietors of the UK Restoria products in Australia. I am not satisfied that
Brodie & Stone fell under any such obligation. Thus, neither of the matters
relied upon by the Ward Group can assist it in establishing that Brodie &
Stone is a tortfeasor in respect of the UK Restoria products offered for sale
by the website proprietors on the Internet. Put simply, the mere circumstance
that the Ward Group informed Brodie & Stone that the UK Restoria products
were being advertised for sale, sold and delivered by the website proprietors
on the Internet to customers in Australia cannot, of itself, convert the lawful
conduct of Brodie & Stone into unlawful conduct.
63
Accordingly, even if the
website proprietors had infringed the Australian Restoria marks or passed off
the UK Restoria products, Brodie & Stone was not a joint tortfeasor.
Conclusion
64
The particular issues upon
which Brodie & Stone has succeeded in respect of the trade mark
infringement and passing off claims against the website proprietors (ie no loss
and damage and consent) were not expressly raised in the defence but those
issues were “in the ring” and were contested: see Nescor Industries Group
Pty Ltd v MIBA Pty Ltd (1997) 150 ALR 633 at 640, 647 and 650 and the
authorities there cited. Accordingly, I regard those issues as being before the
Court for determination.
65 For the above reasons the application of the Ward Group is to be dismissed with costs.