INSIGHT

The Ripple effect: unintended consequences of poor international trade mark awareness

By Paul Mersiades
Intellectual Property International Business Obligations Media, Advertising & Marketing Patents & Trade Marks

In brief 5 min read

In the ongoing dispute between NPP Australia Limited (NPPA), and US based Ripple Labs Inc (Ripple), the Federal Court of Australia has granted an interlocutory injunction preventing Ripple from advertising in Australia under 'PayID' branding until the determination of the proceeding.

NPPA is owned by a consortium of financial institutions including the Reserve Bank of Australia, and offers a fast payments product under the trade mark 'PayID'. NPPA sued Ripple after it began advertising a different payments product under the same name of 'PayID' in Australia.

The injunction was granted despite Ripple providing an undertaking to block access to its website in Australia.

Key takeaways

  • Australian courts are willing to make orders restraining advertising and promotion of services where such conduct has potential to cause substantial confusion amongst consumers.
  • Companies intending to export goods or provide services internationally should take care in ensuring their branding does not infringe local trade marks, including by conducting clearance searches before launch.
  • Businesses operating in fast-moving innovative sectors, such as fintech, should especially bear in the mind the risk of using branding that is identical or similar to others in the field.

Who in your organisation needs to know about this?

General counsel, marketing team.

Two different 'PayIDs'

NPPA is a joint venture public company mutually owned by the Reserve Bank of Australia and 12 Australian banks as a vehicle for the operation of the New Payments Platform (NPP). The NPP is a payments infrastructure platform which enables customers of different financial institutions in Australia to make and receive real-time payments, 24 hours a day, seven days a week. NPPA is the owner of the trade mark 'PayID' in Australia, and uses it to identify the NPP’s addressing service, which allows users to identify each other more easily when making payments. NPPA’s PayID was first launched in February 2018. It has over 5 million registered users in Australia and sees 1 million payments per week.

Ripple is a US-based company which issues the third-largest cryptocurrency in the world by market capitalization. Ripple is part of a consortium, unrelated to NPP, behind an unrelated, open source payments system also called 'PayID'. Ripple launched its 'PayID' branded service in July 2020. Three Australian companies that have collaborated with Ripple appear to have incorrectly assumed Ripple's service was affiliated with the PayID service supplied by NPPA.

NPPA identified a number of usages of the mark 'PayID' on a website operated by Ripple (which was accessible in Australia), and a number of Australian companies that had partnered with Ripple and were advertising the Ripple PayID service to their Australian customers. On this basis, NPPA sued Ripple in the Federal Court of Australia for trade mark infringement.

Two judgments have been given by the Federal Court of Australia in relation to interlocutory issues. The primary infringement case is still ongoing.

Service out of the jurisdiction

In the first judgment published in these proceedings, Justice Burley in the Federal Court granted NPPA's application for service of process outside jurisdiction and substituted service.

'Substituted service' is service by alternative means (here, email) where it is not practicable to serve a document on a person in a way required by the Federal Court Rules. Here, the judge considered that whilst it would have been possible to serve Ripple in accordance with the requirements of the Hague Convention as required by the Rules, it was not practicable to do so in the evolving environment of the COVID-19 pandemic.

NPPA's proposed method of substituted service was emailing the relevant documents to Ripple's legal representative in the US. The judge was satisfied that this would inevitably bring them to the attention of Ripple, because that legal representative had explicitly asked that all correspondence be directed to him, and he has engaged in correspondence on behalf of Ripple since June 2020.

Interlocutory injunction

The second judgment considered whether an interlocutory injunction should be ordered preventing Ripple from advertising in Australia under PayID branding until the determination of the proceeding. Ripple gave an undertaking to the court two days before the hearing of the application for this interlocutory injunction to block access to its website to Australian IP addresses.

For this reason, Ripple proposed that no order be made and that it instead give another undertaking that it not provide payment services directed to Australia under the PayID branding until the determination of the proceeding. Ripple's argument was that such an undertaking would ensure it would not be considered to be in breach if an Australian user accessed a US server without Ripple's knowledge.

Justice Thawley in the Federal Court granted the interlocutory injunction sought by NPPA. He held that NPPA had identified a sufficiently strong prima facie case of trade mark infringement, and the balance of convenience favoured the grant of interlocutory relief due to the potential for Ripple to cause substantial confusion amongst Australian consumers for which damages would not be an adequate remedy. The judge therefore determined that an order should be made, but in the form of the undertaking proposed by Ripple.

A moot point?

At the first case management hearing in the proceedings, counsel for Ripple noted that Ripple had told the three Australian companies with which it had partnered about NPPA's claims, and intended to re-brand away from 'PayID'.

Accordingly, Ripple has caused much ado for nothing. Had it made itself aware of NPPA's trade mark rights and PayID service, which was widely adopted in Australia, before partnering with Australian businesses that would advertise Ripple's PayID service to their Australian customers, this dispute could have been avoided.

Actions you can take now

  • Ensure your trade marks are not being infringed by international businesses advertising or offering online services to Australian customers under deceptively similar branding.
  • Seek advice from Allens' Intellectual Property team regarding trade mark clearance before committing to branding of products and services in a new market, whether that is Australia or overseas.