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Focus: Trade mark infringement on the web – a hairy problem

28 April 2011

In brief: A recent Federal Court case looked at the issue of whether the use of a trade mark on an 'international' website constituted a trade mark infringement in Australia. Partner Tim Golder (view CV) and Senior Associate Mark Williams discuss the case, and highlight the difficulties presented by the online environment when a mark is owned by different parties in different jurisdictions.

How does it affect you?

  • The case outlines when use of a trade mark on a website will constitute use in Australia, to assist trade mark owners in determining whether their trade mark rights have been infringed.
  • The case provides guidance to traders to enable them to avoid infringing third-party rights by using a trade mark on a website.
  • The case highlights the importance of how marks may be used on the internet, when ownership of the mark is divided among different parties in different jurisdictions.

Background

The applicant in the proceedings, International Hair Cosmetics Group Pty Ltd (IHC Aust) is an Australian company, and the owner of Australian trade mark registrations for AFFINAGE and AFFINAGE INFINITI.  The first respondent, International Hair Cosmetics Limited, a UK company (IHC UK) is the owner of the registered mark AFFINAGE in the United Kingdom and 20 other countries.

IHC Aust was established in 1992 by Mr Bailey (a principal of IHC UK) and Mr Jolly with Mr Bailey held the majority shareholding.  It was established as the corporate vehicle by which hair care products bearing the AFFINAGE trade mark were to be distributed in Australia.  In 2002, Mr Jolly and his wife acquired Mr Bailey's shareholding (then 40 per cent) in IHC Aust for the sum of $480,000.  As part of the acquisition, the parties entered into an agreement whereby the distribution of the AFFINAGE products were geographically split – IHC Aust being allocated rights for China, South-East Asia, Australia, New Zealand and the South-West and Western Pacific to the international date line, and IHC UK retaining rights to the balance of the worldwide distributing rights.

At some time after the agreement had been reached, a new Australian company called Affinage Salon Professional Pty Ltd was incorporated to sell hair care products under the brands A.S.P. and KITOKO.  IHC UK held 35 per cent of the shares in Affinage Salon Professional.

As the result of a mediation arising from separate actions brought by each IHC company against the other in Australian courts in 2010, the parties settled the matters by way of deed of settlement, which included Affinage Salon Professional agreeing to change its name so that it no longer included the word AFFINAGE, and an undertaking by IHC UK and its subsidiary that:

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.

The case

In January 2011, IHC Aust's solicitor undertook a Google search for 'Affinage' and noticed 'Affinage Salon Professional' at the website www.affinage.com.  Upon 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 a 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 United States and 'ASP Australia' was designated on the Australian continent.

IHC Aust then commenced proceedings1 seeking that the respondents be permanently restrained from using 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, and seeking certain amendments to the website at www.affinage.com.

The decision

Justice Logan held that the website breached the undertaking in the deed of settlement, and granted an injunction requiring the ASP element of the website at www.affinage.com to be removed.  Furthermore, he found that despite modifications to the website made by IHC UK after the commencement of the proceedings (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.

First, Justice Logan 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 the Ward Group case2, where Justice Merkel 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.

Justice Logan then deemed that use of the phrase 'as a sign' in the undertakings contemplated use of the word AFFINAGE as a trade mark.  In determining whether the use of AFFINAGE on the website constituted use as a trade mark, his Honour noted the difficulty faced by IHC UK, which was legitimately positioned to use the trade mark in respect of certain jurisdictions.  He also noted that it could legitimately say that it had introduced the AFFINAGE range of products into Australia.  However, his Honour was persuaded by the repeated uses of 'our brands' in conjunction with 'worldwide' and 'are marketed globally by IHC UK and through its associated companies in the USA and Australia' to determine that the use of AFFINAGE was more than simply a reference to the history of the products in Australia, but was used as part of the promotion of the goods worldwide, including in Australia.  Also of relevance, was the fact that the home page of the website was emblazoned with the word AFFINAGE.

With regard to the modified website, Justice Logan said that although Australia had been removed from the drop down box for AFFINAGE, Australian consumers remained on the global landing page.  The consumers were conditioned that AFFINAGE is a worldwide brand in which the Australian province was known as ASP, and there was nothing on the webpage to say that IHC UK had  no connection with the AFFINAGE brand in Australia.  Accordingly, AFFINAGE was still being used as a trade mark on the modified website.

Implications

The decision confirms the elements to be considered 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.  It is particularly important to note that 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.

Footnotes
  1. International Hair Cosmetics Group Pty Ltd v International Hair Cosmetics Limited [2011] FCA 339.
  2. Ward Group Pty Ltd v Brodie & Stone plc [2005] FCA 471.

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