Lessons learned on website redirection and trade mark infringement

Lessons learned on website redirection and trade mark infringement

Lessons learned on website redirection and trade mark infringement

DRH Holdings (Australia) Limited v David Reid Homes Australia Pty Ltd [2012] FCA 1336

In this ever evolving and highly competitive online environment, businesses are pulling out all the stops to get you to their websites. For example, when a domain name (which contains a registered trade mark) is entered into a search engine and you are deliberately redirected to an unrelated or competitor’s website. The person responsible for you being redirected may have just committed trade mark infringement (as well as misleading and deceptive conduct).

The case of DRH Holdings (Australia) Limited v David Reid Homes Australia Pty Ltd1 is another case in a line of Federal Court decisions which has held that using a trade mark in a domain name which redirects consumers to an unrelated or competitor’s website constitutes trade mark infringement.

A finding of infringement in these circumstances demonstrates a widening of the situations in which persons may be liable for trade mark infringement in Australia. It also provides trade mark owners with a broader context in which to enforce their registered trade marks.

The facts of the DRH Holdings trade mark infringement case

The Applicant (DRH Holdings) is a company incorporated in New Zealand, and registered in Australia as a foreign company. At all material times Mr David Reid was the sole director and local agent of DRH Holdings. DRH Holdings develops and owns a business system for the supply, design and construction of houses (“the Business”). It is the registered owner of trade marks numbers 1026582 “David Reid Homes Raising the Standard” and 1026671 “David Reid Homes”, which are used in connection with the Business.

On 1 April 2004 DRH Holdings and David Reid Homes Australia entered into a Master Franchise Agreement pursuant to which DRH Holdings granted David Reid Homes Australia the right to operate the Business in Australia. For various reasons the relationship failed. There was evidence before Justice Collier that after the Agreement was abandoned David Reid Homes Australia took “deliberate actions” which resulted in redirection of the website www.davidreidhomes.com to the website www.davidreidhomes.com.au. As a result of these actions, all website enquiries directed to www.davidreidhomes.com were redirected to the Australian website under the control of David Reid Homes Australia.

There was evidence before the Court that over the course of several days following the abandonment of the Agreement David Reid Homes Australia:

caused the websites with [DRH Holdings’] trade marks to be redirected to prevent their use by DRH Holdings or anyone else associated with the Business, and also to enable David Reid Homes Australia to make disparaging comments concerning DRH Holdings on those websites, all of which was contrary to the terms of the Agreement.

Justice Collier held that this conduct constituted trade mark infringement.

David Reid Homes Australia was ordered to refrain from establishing, maintaining, accessing, redirecting or interfering in any manner with the following domain names or with the data published at the domain names www.davidreidhomes.com.au and www.davidreidhomes.com.

Other cases of website redirection and trade mark infringement

In making his decision, Justice Collier did not refer to the earlier decisions of Solahart Industries Pty Ltd v Solar Shop Pty Ltd2 or Edgetec International Pty Ltd v Zippykerb (NSW) Pty Ltd3 where website redirection was held to constitute trade mark infringement.4 In the Solahart case the Court found that mere use of a domain name to resolve to a website hosted from a different domain name was infringement even where there is no use of the trade mark on the website or in the url. In the Solahart case the Court considered that the maintenance of the domain name containing the deceptively similar trade was a deliberate act to funnel traffic to the website to which consumers were redirected.

In the Edgetec case the Federal Court held that Zippykerb’s (the Respondent’s) use of KWIK KERB (which was considered to be substantially identical to the Applicant Edgetec’s KWIK KERBER mark) in domain names for the purpose of redirecting internet users to Zippykerb’s website constituted trade mark infringement. This was seen to be analogous to using another person’s sign or trade mark on the front of a shop to indicate the goods and services sold within. Even though Zippykerb distinguished itself from Edgetec on its website, the Federal Court considered this to be immaterial to the enquiry of whether or not there had been a trade mark infringement.

Similar to the Solahart case, in the DRH Holdings case there were “deliberate actions” by David Reid Homes Australia to direct inquiries intended for the international business to the Australian website and to make disparaging remarks. The registered trade marks in the present case were also used in the domain name to which consumers were redirected and on the offending website.

When redirection constitutes trade mark infringement

These cases demonstrate a broadening of what the Courts consider constitutes infringement under the Trade Marks Act 1995 (Cth).

To infringe a registered trade mark a person must use as a trade mark a sign that is substantially identical with, or deceptively similar to, a registered trade mark in relation to the goods or services in respect of which the trade mark is registered or in relation to similar to similar goods or services to those covered in the registration.

To constitute trade mark infringement, the sign must be “used as a trade mark”, that is it must be used as a badge or indicator of origin of the goods or services offered. A sign that is used ‘as a trade mark’ will generally perform a ‘branding function’. The appropriate question to ask is whether the impugned words would appear to consumers as possessing the character of a brand. The context of the use complained of is all important. One often considers whether the impugned sign is prominently displayed on packaging or in advertising or on a website and not instead used for primarily descriptive or laudatory purposes.

However, applying this well established infringement test to a situation where a trade mark is used in a domain name for purposes of redirection requires one to think a little outside the square. Nonetheless, on the basis of a line of current Federal Court authority this conduct can indeed constitute trade mark infringement under Australian law.

Lessons about domain name use, website redirection and trade mark infringement

For individuals and businesses

  • Unless you are authorised by the trade mark owner to do so, do not use another trader’s trade mark in a domain name to redirect a consumer to your website.

For trade mark owners

  • mere registration of a domain name that includes a trade mark does not constitute trade mark infringement. Such conduct may constitute common law passing off or misleading and deceptive conduct particularly in circumstances where the trade mark is well and favourably known. Trade mark owners may in these circumstances also have recourse under a domain name Dispute Resolution Policy (such as the UDRP or auDRP);
  • mere use of a domain name to resolve to a website hosted from a different domain name may constitute infringement, particularly when there is use of the trade mark in the domain name to which the website resolves and/or on that website (as was the case in DRH Holdings). However, even where there is no use of the trade mark on the website to which the domain name resolves or in the URL, trade mark infringement may be found. This is particularly likely if the responsible party has deliberately taken this action to divert or funnel traffic from the trade mark owner’s website to another website.

Endnotes

  1. [2012] FCA 1336
  2. [2011] FCA 700 
  3. [2012] FCA 281
  4. Solahart Industries Pty Ltd v Solar Shop Pty Ltd [2011] FCA 700 or Solahart Industries Pty Ltd v Solar Shop Pty Ltd (No. 3) [2011] FCA 884 and Edgetec International Pty Ltd v Zippykerb (NSW) Pty Ltd [2012] FCA 281