FEDERAL COURT OF AUSTRALIA

Lift Shop Pty Ltd v Easy Living Home Elevators Pty Ltd [2013] FCA 900

THE COURT ORDERS THAT:

1.    The application is dismissed.

2.    Any application for costs be made within 14 days.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

The proceedings

1    On 20 November 2012, the applicant commenced proceedings in this Court alleging that the respondent had infringed the applicant’s registered trademark (shown in Schedule 1), breached s 18 of the Australian Consumer Law (“ACL”) contained in Schedule 2 of the Competition and Consumer Act 2010 (Cth) (formerly s 52 of the Trade Practices Act 1974 (Cth)), and committed the tort of passing off.

2    Those allegations arose from steps taken by the respondent in about September 2012 to modify its website and, in particular, the contents of its home page to be responsive in particular ways to searches by prospective or potential consumers using various internet search engines, such as Google, Yahoo, Bing, etc.

3    The complaints by the applicant concern, in particular, the steps taken by the respondent to appear high in the rankings given by internet search engines in response to some particular search terms. The applicant has alleged specifically that the respondent has infringed the applicant’s trademark by using the term “Lift Shop” in the title of its website. The applicant has also complained that the respondent has used the term “lift shop” in the contents of its home page, and has alleged that the respondent has engaged in misleading or deceptive conduct (or conduct likely to mislead or deceive) and the tort of passing off, because it has by its conduct suggested that it is the applicant, is associated with the applicant or has the applicant’s endorsement.

4    For the reasons which follow, I do not accept that any of the causes of action relied upon by the applicant are established.

Background

5    Each of the parties supplies customised elevators/lifts and disability platform elevators in Australia. They compete in the same general price range – from about $17,000 to $130,000 approximately. It appears that the applicant offers a Chinese product and the respondent provides a European product. There was no sufficient basis to conclude that one range of products was generally inferior, or superior, to the other.

6    The parties are in active competition with each other for limited business in a small Australian market. Although they compete nationally, their competition is concentrated in New South Wales, where the applicant does most of its business.

7    In my view, each of the applicant and the respondent is keen to take the potential business of the other, and each regards a sale to the other as one lost to it. The present proceedings are apparently only one manifestation of the commercial conflict in which the parties are engaged.

8    Some examples of their competitive practices were given in evidence. At one point, Mr Katz (the Managing Director of the applicant) came to the view that the respondent was subsidising its New South Wales sales (at significantly reduced prices) by maintaining prices in Victoria (where the applicant then had no substantial business) at much higher levels. The applicant’s response was to open its own premises in Victoria in the same street as the respondent, three doors away. I formed the view from the evidence of Mr Katz and Mr Pizzie (the Managing Director of the respondent) that the applicant and respondent are not just competitors, but commercial enemies.

9    One aspect of the competition between the applicant and the respondent is reflected in the approach each takes to internet advertising and to the results generated by search engines operating in relation to the internet. It is the conflict and competition between them in that particular area which has engendered the present proceedings.

Internet searches

10    Generally speaking, each of the applicant and the respondent take steps to ensure that when potential consumers use internet search engines, the details of their own business appear on the first page of search results. The result is often that their respective entries appear in close proximity when search terms relating to domestic lifts or elevators are used.

11    It was the steps taken by the respondent in 2012 to improve its position arising from internet searches that prompted the applicant to commence the proceedings.

12    In about March 2011, Mr Pizzie decided that the respondent’s website should be updated. This task was assigned in about August 2011 to Ms Milena Medeiros, who was acting as the National Marketing Manager at the time. Ms Medeiros obtained the assistance of a firm called TopRankings which advised specifically on “search engine optimisation”. The respondent was asked by TopRankings to nominate the website addresses of its top five competitors, select keywords to “target” and draft a title for its website including the top five keywords selected. TopRankings provided a list of suggested keywords, including “easy living” and “easy living home elevators”, terms clearly associated with the respondent. The list also included “residential lifts”, “home elevators”, “home lifts”, “domestic lifts”, “lifts for homes”, “lift shop” (ranked 8 of 173) and “liftshop” (ranked 27 of 173). The then National Marketing Manager chose “lift shop” (but not “liftshop”) as one keyword to be used.

13    In about mid-June 2012, Ms Dijana Vojvodic, who normally filled the position of National Marketing Manager, returned from maternity leave and resumed her normal duties, including finalising the website changes. Ms Vojvodic developed some content for the home page, including:

“Shopping for lifts?

OR looking for a lift shop?

OR Working on a project that requires an elevator?

Easy Living Home Elevators can help”

14    In changes made subsequently, the phrase “we’re a lift shop in our 14th year” was added to the home page.

15    The changes that were made, especially the addition of the term “Lift Shop” in the title of the website, the term “lift shop” in the content of the home page and nomination of “lift shop” as a keyword, had the result that for any search using or including the term “lift shop” the applicant and the respondent usually appeared on page one of the search results and their entries usually appeared in fairly close proximity.

16    At the time of the hearing, the “titles”, “URLs” and descriptions appearing in search results for the applicant and respondent were as follows:

applicant –

Australia’s No 1 for Luxury Home Elevators | Lift Shop | Multi-Award …

www.liftshop.com.au/ ▼

Lift Shop is Australia’s No. 1 multiple award-winning leader in quality, luxury home elevators. Lift Shop is a national supplier of luxury home lifts, residential lifts …

respondent –

Easy Living Lifts | Home Elevators | Lift Shop – Home Elevators …

www.easy-living.com.au/ ▼

At Easy Living home elevators website you will find details on all of our lifts and home elevators here, which will help you achieve the easy living you deserve.

17    Over time there have been several changes in the title of the respondent’s website, although not in its URL or description. There were three examples in evidence of the contents of search page results responding to a search for “lift shop au”.

18    In the first example from a search on 8 October 2012, the respondent’s details were shown as:

Easy Living Lifts | Home Elevators | Lift Shop – Lift Shop

www.easy-living.com.au

At Easy Living home elevators website you will find details on all of our lifts and home elevators here, which will help you achieve the easy living you deserve.

19    In the second example from a search in January 2013, the respondent’s details were shown as:

Easy Living Lifts | Home Elevators | Lift Shop – Home passenger Lifts

www.easy-living.com.au/

At Easy Living home elevators website you will find details on all of our lifts and home elevators here, which will help you achieve the easy living you deserve.

20    In the third example from a search on 5 August 2013, the respondent’s details were shown as:

Easy Living Lifts | Home Elevators | Lift Shop – Home Elevators …

www.easy-living.com.au/ ▼

At Easy Living home elevators website you will find details on all of our lifts and home elevators here, which will help you achieve the easy living you deserve.

21    For the purpose of the present proceedings, nothing will turn on the alterations to the title of the respondent’s website, although it might be noted that the use of the term “Lift Shop” in the title altered at one point from two uses of the term to one. Owing to the use of the keyword “lift shop” in the content of the home page, the respondent’s website was also more likely to be shown in responses to a search for “lift shop” than if that term had not been used or had not been nominated as a keyword.

22    I am satisfied that use of the term “Lift Shop” in the title of the respondent’s website, and the term “lift shop” in the content of the home page, together with the designation of the term “lift shop” as a keyword, was intended to ensure that details of, and access to, the respondent’s website were made available to anyone who might search for that term, as well as for “lift” or “lifts”. However, the respondent and the applicant were not the only businesses to be identified if a search for “lift shop” was made.

23    In the first example of the contents of the search page given earlier, the term “lift shop” was used also in other entries on the search page results not associated with either the applicant or the respondent. One such entry was:

Lift Shop

www.MonorailElevators.com.au

Stairlift & Homelift Specialist To Suit All Homes. Call Now. Sydney.

24    Another was:

Lift Shop near Sydney, New South Wales

bing.com/local

1.    Southwall Lifts & Hoists – Website – 1800 244 787 Sydney

2.    Master Lifts – (02) 9907 4055 Sydney

3.    Lift Fix – Website – (02) 9822 2301 Sydney

Data from: Yellow Pages®

25    Another was:

Lift Shop Equipment > > Home

www.liftshopequipment.com

Lift Shop Equipment is a equipment repairs service, that services forklifts, farm equipment, construction equipment and any other types of repair. Need a part for …

26    It appears from these entries that the term “lift shop” is used descriptively by businesses not associated in any way with either the applicant or the respondent to draw attention to themselves.

The causes of action

Passing off

27    The applicant accepted that this cause of action added nothing to the claim under s 18 of the ACL and did not press it. In my view, that was an appropriate position to take.

Misleading and deceptive conduct

28    In final submissions, the applicant identified the central issues for this cause of action as follows:

… In the present case, the applicant submits that the manner in which the respondent’s website is reported in the search engine results is likely to mislead members of the public into believing that it is the website of “Lift Shop” or in some other way associated with “Lift Shop”. Thus, the case is that the respondent by incorporating the term “Lift Shop” into the page title and other portions of its homepage has engaged in conduct which causes a misleading representation of an association between the applicant and the website at www.easy-living.com.au/ to be communicated to members of the public. The website is either a website of the applicant or somehow approved by it. Thus, the claim of contravention of s.18 is co-extensive with the claim of contravention of s.29 (1) (g) which requires a misleading representation.

29    I am satisfied that one commercial objective of the respondent was to appear in search results which were likely to identify the applicant. That objective was part of a wider objective to compete with the applicant whenever possible by drawing the applicant’s potential customers’ attention to the respondent’s services. However, accepting that the term “Lift Shop” in the title of the web page and the term “lift shop” in the contents of the home page were chosen (together with nominating “lift shop” as a keyword) to bring the respondent’s business to the attention of potential customers of the applicant, that does not mean that the respondent thereby suggested, or intended to suggest, an association with the applicant.

30    To begin with, the material to which I earlier referred clearly suggests that, in this area of commercial endeavour, the term “lift shop” also has an understood generic connotation. The applicant ultimately has not established to the requisite standard that the respondent’s use would be understood by consumers in any other way.

31    Moreover, I am not satisfied that it was ever any part of the objective of the respondent to suggest any association between the respondent’s business and that of the applicant. On the contrary, in my view the objective was to differentiate the respondent’s business from that of the applicant and make it clear that doing business with the respondent was open as an alternative to doing business with the applicant. The respondent did not hope to take the applicant’s business as a result of some misunderstanding that the respondent and the applicant might be associated. The respondent sought to obtain business in open competition with the applicant.

32    There are a number of subsidiary conclusions which have contributed to that overall finding.

33    First, I accept the evidence of Mr Pizzie that he has a poor view of the reputation of the applicant, and Mr Katz, and has no desire to associate the respondent with the applicant.

34    Secondly, I accept Mr Pizzie’s evidence that his view was that the reputation of the respondent would not be enhanced by any association with the applicant in circumstances where the respondent portrayed itself as a source of good quality European lifts and elevators, while the applicant’s source of supply was China.

35    Thirdly, in my view there was clear differentiation between the entries relating to the respondent which appeared on any search page and those which related to the applicant. That was so in a number of searches. The URL’s were quite different. The descriptions in the titles were different. There was nothing on the search page itself to suggest any association between the two businesses. Usually, the entries for the applicant and the respondent appeared in close proximity so that, if anything, the distinction between the two businesses was more emphasised than obscured. Any visit to the respective websites (which was a necessary step if the information provided by the search page was to be followed up) could only reinforce the appearance of separate businesses, in competition, and further dispel any idea of association between them.

36    The foregoing matters may be further illustrated by taking into account the nature of the activity in which each business and their potential customers are engaged through the medium of an internet search engine.

37    The objective of the business, when it sets out to optimise search results in relation to its website, is to get high rankings in the search and, if possible, a page one position in the results. Assuming that the merchant achieves a page one position, at this point the objective of each of the merchant and the potential consumer has not yet been achieved. The merchant has succeeded in drawing the means of access to its website to the attention of the consumer, and the consumer has been provided with a means of obtaining further information, but no form of commercial exchange can occur without further steps on the part of the consumer.

38    On the evidence in the present case, the information provided by the search includes the URL as well as the title of the website provided by the merchant and a short description. The evidence demonstrated that the information provided by the applicant and the respondent (and the means to go to their respective websites) is invariably displayed in close proximity, often one after the other. The applicant’s URL has a close association with its mark (www.liftshop.com.au). The respondent’s URL also has a close association with its own mark (www.easy-living.com.au). In my view, there is no respectable possibility of confusion, even at this point, about whether the respondent’s website is a surrogate for the applicant’s or that the respondent is suggesting that it is associated with the applicant. The two sets of information are presented as alternatives, consistent with the idea that the applicant and respondent are competitors rather than being associated.

39    In any event, as I have said, a further step is necessary before any meaningful commercial exchange can take place, or even be considered. The potential consumer must put the information in the search to use. Normally, that would be by taking advantage of the electronic access to websites which is offered by the search results. Access to the website of the applicant and respondent would simply confirm the lack of any suggested association between them.

40    So far as the cause of action under s 18 of the ACL is concerned, the elements of that cause of action have not been established.

Infringement of trademark

41    The applicant must first establish that the respondent used the words “Lift Shop” in the title of its website as a mark – i.e. as a badge of origin – as shown in the search results. The allegation of infringement of trademark must be considered at two points in time. First, in October 2012 when the title of the respondent’s web page was displayed in search results as follows:

Easy Living Lifts | Home Elevators | Lift Shop – Lift Shop

www.easy-living.com.au

At Easy Living home elevators website you will find details on all of our lifts and home elevators here, which will help you achieve the easy living you deserve.

Secondly, in January 2013 when it was displayed as follows:

Easy Living Lifts | Home Elevators | Lift Shop – Home passenger Lifts

www.easy-living.com.au/

At Easy Living home elevators website you will find details on all of our lifts and home elevators here, which will help you achieve the easy living you deserve.

42    There are three elements in the title on each of those occasions, followed by a summary statement (first “ – Lift Shop” and later “ – Home passenger Lifts”). The three initial elements in the title on each occasion (Easy Living Lifts | Home Elevators | Lift Shop) require individual, as well as composite, attention. The first element reflects a mark of the respondent and is clearly used as a badge of origin in the title. The second element is obviously merely descriptive. It is the third element which is contentious.

43    It is clear from the search results in evidence that other businesses have also used the term in their titles and that the Bing search engine used it to group three lift businesses together. I am also satisfied, for reasons given earlier, that the respondent did not wish to suggest any association with the applicant. I am not satisfied, therefore, that the respondent used the term “Lift Shop” as a mark, much less as its own mark. In my view, the term was used in a descriptive way to take advantage of the operation of the search engines.

44    In my view, therefore, the applicant has failed to discharge the onus which lies on it to show that the term “Lift Shop” was used by the respondent in the title of its home page as its own mark.

45    The result of these conclusions is that the applicant has failed to make out a case of infringement of its trademark.

46    That conclusion makes it unnecessary to deal in detail with the case alleging deceptive similarity. However, some short observations are in order. If I had concluded that the respondent had employed the term “Lift Shop” as a mark in the title of its website, as shown in the search page results, I would have accepted the applicant’s contention that the mark used was deceptively similar to the applicant’s mark. That is because I do not accept the respondent’s contentions that only the term “liftshop” could be deceptively similar, or that the applicant’s word mark is not significant in its own right. Although the applicant’s mark does not have a space between the words LIFT and SHOP, the way the mark is presented makes it clear that the two words are used conventionally to convey a composite idea with two elements. The prominence given to the word(s) in the mark permits the applicant to rely on reproduction of those words as a possible infringement. The present is not a case where the words represent only a minor element in the work (cf Crazy Ron’s Communications Pty Ltd v Mobileworld Communications Pty Ltd (2004) 209 ALR 1). Furthermore, the registered mark makes it apparent from its appearance that each of the words LIFT and SHOP in the composite term LIFTSHOP are given individual emphasis. The accompanying features of the mark do not detract from the central significance of the word LIFTSHOP, nor from the fact that the term is naturally pronounced as two words, rather than one.

47    Accordingly, I would, had it been necessary to deal with the matter, have found that this aspect of the case was made out. It would then have been necessary to consider what relief should be granted.

Claims for relief

48    The applicant’s claims for relief had two principal aspects. The first aspect concerned damages. The applicant did not seek compensatory damages, but did seek additional damages under s 126(2) of the Trade Marks Act 1995 (Cth) (“the Act”). In my view, additional damages for flagrant conduct would not have been warranted. The respondent did not set out to use the term “Lift Shop” as its own mark. Had a conclusion been reached that the respondent had infringed the applicant’s trademark, it would have been despite what I regard as the respondent’s intent and not because of it. In my view, the respondent did not set out to associate itself with the applicant, the applicant’s business or the applicant’s mark. On the contrary, the respondent set out to position itself to compete with the applicant in its own right by drawing the attention of potential customers to its own capacity to satisfy their requirements. It was not seeking to profit from the applicant’s reputation. It was seeking to be chosen in its own right.

49    This conclusion makes it unnecessary to express any view about whether additional damages are available as a form of relief in the present case, having regard to the fact that s 126(2) of the Act commenced to operate only on 15 April 2013.

50    Had any element of the applicant’s case been made out, it would also have been necessary to decide whether any other relief was appropriate. No declaratory relief was sought by the applicant, but the applicant did seek injunctive relief.

51    On the second day of the hearing, when the evidence was almost complete, the respondent through its counsel gave an unconditional undertaking to the Court (without admissions) in the following terms:

1.    The Respondent undertakes without admission as to liability, to:

(a)    permanently remove the phrase “lift shop” from the “<H1> Header” and the meta-title and meta-keywords on its website www.easy-living.com.au.

(b)    remove and refrain from using the phrases “looking for a lift shop?” and “Today we’re a lift shop in our 14th year” for the www.easy-living.com.au website.

(c)    re-submit the URL www.easy-living.com.au, for re-indexing to the search engine providers to whom it has previously submitted the URL for indexing, being Google, and Yahoo/Bing,

within 5 business days.

52    Counsel for the applicant was not able to point to any necessity for injunctive relief in light of the undertaking. My conclusion that the applicant’s case does not succeed makes it unnecessary to give further attention to this aspect of the case.

Orders

53    In view of my earlier findings that none of the causes of action have been satisfied, the application will be dismissed. The respondent has sought an opportunity to be heard on costs. That opportunity will be afforded.

Associate:

Dated:    10 September 2013

SCHEDULE 1