FEDERAL COURT OF AUSTRALIA

Buchanan Group Pty Ltd v Sorgetti [2002] FCA 1646

TRADE MARKS – infringement - interlocutory injunction – applicant’s mark “brandpower” used in connection with website brandpower.com.au and elsewhere – respondents’ use of website “brandpower.com” – whether triable issues – balance of convenience

TRADE PRACTICES – interlocutory injunction – “dotcom assumption” – whether persons seeking site of applicant’s business Brandpower might visit respondents’ site brandpower.com on assumption that applicant’s site would be name of business plus “.com”

WORDS AND PHRASES – “place of business”

Trade Marks Act 1995 (Cth) ss 17, 24(1), 120(1) 122(1),

Epitoma Pty Ltd v Australasian Meat Industry Employees Union (No. 2) (1984) 3 FCR 55 at 58-59 cited

Philips Electronics MV v Remington Products Australia Pty Ltd (1997) 39 IPR 283 at 289 to 290 cited

Australian Competition and Consumer Commission v Purple Harmony Plates Pty Ltd (No. 3) (2002) FCA 1487 at [43] cited

Lego Australia Pty Ltd v Pauls Merchants Pty Ltd (1982) 42 ALR 344 at 352 referred to

Taco Co of Australia Inc v Taco Bell Pty Ltd (1992) 42 ALR 177 applied

BUCHANAN GROUP PTY LTD v LEONARD SORGETTI & ANOR

V 838 OF 2002

HEEREY J

19 DECEMBER 2002

MELBOURNE

Upon both the Applicant by its Counsel and Timothy Joseph Buchanan of Unit 41, 74 Gladesville Boulevard, Patterson Lakes, giving the usual undertaking as to damages,

THE COURT ORDERS THAT:

1.                  The First and Second Respondents, whether by themselves or by their directors, agents or servants, be until the hearing and determination of the proceeding or further order restrained from using the in any way in the course of trade without the licence of the Applicant:

(a)        the mark “BRAND POWER” or any other word or words substantially identical or deceptively similar to the mark “BRAND POWER” whether alone or as part of any mark in relation to:

(i)         printed matter including books, catalogues, magazines and advertising literature, stationery, paper and cardboard (“Promotional Goods”);

(ii)                goods of the same description as the Promotional Goods;

(iii)               services closely related to the Promotional Goods.

 (b)       the mark “BRAND POWER” or any other word or words substantially identical or deceptively similar to the mark “BRAND POWER” whether alone or as part of any mark in relation to:

(i)                  advertising and marketing services; information and publicity services, telephone advertising including publication of directories and catalogues; and business services falling within Class 35 (“Promotional Services”);

(ii)                services of the same description as the Promotional Services;

(iii)               goods closely related to the Promotional Services.

2.         The First and Second Respondents, whether by themselves or their agents or servants, be until the hearing and determination of the proceeding or further order restrained from using the domain names ‘brandpower.com’ and ‘brandpower.tv’.

3.         The Applicant file and serve a statement of claim on or before 31 January 2003.

4.         The Respondents file and serve a defence and cross-claim on or before 21 February 2003.

5.         The Applicant file and serve a reply and defence to cross-claim (if any) on or before 14 March 2003.

6.         The proceeding be referred to mediation before a deputy district registrar to be held before 28 February 2003.

7.         The proceeding be adjourned to a directions hearing to a date to be fixed in March 2003.

8.         Costs are costs in the cause.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

REASONS FOR JUDGMENT

1                     The applicant seeks an interlocutory injunction to restrain the infringement of its registered trade mark Brand Power.  Two other registered trade marks are referred to in the application but the respondents have ceased to use them and they no longer raise any issue. 

2                     The mark Brand Power has been registered in Australia since 1992 in class 35:

“Services relating to advertising and marketing; information and publicity services; services associated with telephone advertising including publication of directories and catalogues; and business services falling within this class.”

and class 16:

“Printed matter including books, catalogues, magazines and advertising literature; stationery, paper and cardboard.”

3                     The business of the applicant is to provide a form of television advertising known as “infomercials” in which some product, usually a supermarket item, is presented by a person identified as a representative of Brand Power.  The virtues of the product are extolled.  The advantage of this particular method is that there it creates an aura of objectivity arising from endorsement by somebody other than the manufacturer of the product.  The confidential figures presented in evidence show that the applicant has earned substantial revenues from this activity.  It has promoted leading brand products of a wide range of large companies including Johnson and Johnson, Smith Klein Beecham, Bristol Myers, Kraft Foods, Colgate Palmolive, Kelloggs and others. 

4                     Apart from its use on television commercials, the Brand Power mark appears on home-delivered fliers, at point of sale material and on a dedicated Internet site under the domain name brandpower.com.au.  The Internet site is an integral component of the marketing process provided under the Brand Power mark. 

5                     In October this year the respondents, on payment of the sum of $US5,300, became the owners of a United States domain name brandpower.com.  The respondents have undertaken the development of a web site.  At the moment it is in its infancy, further work having been brought to a halt as a result of the issue of these proceedings.  In its most recent form the respondents’ web site has in large letters at the top ‘brandpower.com’ and underneath that in smaller letters, “Computer - Communication – Internet”.  Following this there are passages from a book, “Marketing Discipline for the 21st Century”, by Steven Howard, which emphasises the importance of corporate images for organisations.

6                     According to the first defendant, Mr Sorgetti, who is a director of the second respondent, Pacific Media Group Pty Ltd, that company

“assists clients with the development of their web-based business presence.  It provides website development, domain name registration, graphic design, logo design and design of stationery and business cards.”

In a later affidavit Mr Sorgetti deposes that he envisages:

“The primary purpose of the Respondent’s brandpower.com site would be to provide information, education, and training to clients to assist them to establish, build, and maintain or enhance their web presence on the World Wide Web.  My intention was and is to expand a client's knowledge and awareness of the benefits of developing a competitive Internet development strategy to maximise their business impact in cyberspace. 

7                     The principles applicable are not in dispute.  The applicant has to show that there is a serious issue to be tried:  Epitoma Pty Ltd v Australasian Meat Industry Employees Union (No. 2) (1984) 3 FCR 55 at 58-59.  If that test is satisfied then the court looks at the balance of convenience as to whether an interlocutory injunction has to be granted.  That involves assessing the hardship which would be suffered by the applicant if no injunction were granted but it succeeds at trial, as compared with the hardship to the respondent if an injunction is granted but the applicant fails at trial. 

8                     A further general point to be made is that when - as in the present case - the court is concerned with complex issues of law and fact in the setting of a dispute about intellectual property, issues of liability will usually require detailed argument and mature consideration.  The court does not reach a final conclusion.  Rather, it is a question of whether the applicant's case is without serious prospect of success, frivolous, vexatious or hopeless: see Philips Electronics MV v Remington Products Australia Pty Ltd (1997) 39 IPR 283 at 291.  It is also to be borne in mind that in this case part of the respondents’ argument on the trade mark issues in substance asserts the invalidity of a mark registered and used for ten years.  A court would take some persuasion to conclude that there is no triable case on such issues and that an infringer ought to obtain, in effect, summary judgment in its favour.

9                     The causes of action relied upon by the applicants were for infringement of trade mark and alternatively for breach of s 52 of the Trade Practices Act 1974 (Cth) and passing off.  The latter two causes of action can conveniently be considered together. 

10                  Turning to the trade marks cause of action, counsel for the respondents contended first that there was not, within the meaning of s 17 of the Trade Marks Act 1995 (Cth) (the Trade Marks Act), any use or intended use of the respondents’ mark to distinguish services dealt with or provided in the course of trade.  He said that the words “Brand Power” were merely descriptive and could not indicate a trade connection.  I am satisfied that there is, however, at least a triable issue as to this.  The use of the words brandpower.com in a prominent position on the respondents’ web site is not, on the face of it, descriptive of content.  Rather, as counsel for the applicant suggested, it is used as a banner.  It would be surprising if the mere affixing of ‘.com’ to a word which is a registered trade mark had the effect that there was no longer use as a trade mark. 

11                  Secondly, counsel for the respondent relied on s 122(1)(a)(i) of the Trade Marks Act.  He said that brandpower.com was merely the respondent's address.  At least for present purposes, it seems to me that “place of business” in this provision is used in the sense of a physical location and not in any extended sense as comprehending an Internet site.  The respondent's place of business on that basis is 14 Horfield Avenue, Box Hill North. 

12                  Thirdly, counsel argued that the respondents had used the sign in good faith to indicate a characteristic of their services and thus were within the protection of section 122(1)(b)(i).  However, as already indicated, I think it arguable that the words are not used in a descriptive sense but rather as a trade mark.

13                  Fourthly, counsel relied on s 24(1) of the Trade Marks Actwhich applies where a trade mark, after the date of registration of the trade mark, becomes

“generally accepted within the relevant trade as the sign that describes or is the name of an article, substance or service.”

14                  He referred to the large number of hits obtained by the words “brandpower” or “brand power” through a Google search, to a course being conducted at Royal Melbourne Institute of Technology called “Brand Power”, and to a definition in a Monash University dictionary of the term “brand power” and to domain name registrations.  All that seems to me, arguably at least, not to make out a case that the words “brand power” have become generally accepted as describing the sort of service the applicant provides, irrespective of who provides it.  As counsel for the applicant pointed out, an Internet search for the words “general electric” might produce a great number of hits.

15                  Fifthly, counsel argued that for the purposes of s 120(1) of the Trade Marks Act the respondents’ mark was not to be used in relation to goods or services in respect of which the trade mark is registered.  He drew a distinction between the services to which class 35 refers and contrasted that with the consultancy type of services which the respondents provide.  It seems to me however to be at least arguable that the respondents’ business comes within the expression “services relating to advertising and marketing and information and publicity services”.  Advice about the development of web sites, domain registrations, graphic designs, logo designs and the like seem to me squarely within the description “information and publicity services”.  Moreover, the respondents’ business is not confined to the Internet.  It includes the design of stationery and business cards, which is plainly within class 16.  I think that also answers an alternative point raised by counsel for the respondent under s 120(2)(b). 

16                  Having found there is a serious issue to be tried on the trade mark infringement cause of action, I need say little further about the trade practices and passing off claims.  Counsel for the respondents did emphasise that the Internet name was registered in the United States but, as he conceded, this Court acts in personam and there is no doubt that it has appropriate jurisdiction: see Australian Competition and Consumer Commission v Purple Harmony Plates Pty Ltd (No. 3) (2002) FCA 1487 at [43].  The main thrust of the respondents’ case was that there could be no active misrepresentation because persons could only get to the respondent’s site by correctly typing in the address brandpower.com.  If they somehow reached the site by mistakenly typing in that address, that would be something for which the respondent was not responsible.

17                  Reference was made to Lego Australia Pty Ltd v Pauls Merchants Pty Ltd (1982) 42 ALR 344 at 352.  It might be noted that in that case, however, their Honours, at 350, referred to the earlier case of Taco Co of Australia Inc v Taco Bell Pty Ltd (1992) 42 ALR 177 and said:

“In our joint judgment in that case, we were at pains to stress that the question whether the particular conduct of which complaint is made is misleading or deceptive or is likely to mislead or deceive is, in the ordinary case, a question of fact to be answered in the context of the evidence as to the alleged conduct and as to relevant surrounding facts and circumstances and that, irrespective of whether conduct produces or is likely to produce confusion or misconception, it cannot, for the purpose of s 52, be categorized as misleading or deceptive unless it contains or conveys in all the circumstances of the case, a misrepresentation.” 

That passage emphasises again the importance, in the context of an interlocutory injunction application, of being careful before arriving at any conclusion that a factual issue of this kind is unarguable or hopeless. 

18                  One of the points raised by the applicant relates to the so-called “dotcom assumption”, namely that some people will assume that the name of a company followed by “.com” will constitute its Internet site and so to save the trouble of using a search engine they will simply type in that name with the addition of “.com”.  If that happened in the present case, somebody intending to communicate with the applicant's site would be led to the respondents’ site. 

19                  All I can say at the moment is that, as a matter of prediction of human behaviour, the dotcom assumption does not seem to be inherently unlikely.  I regard it as a consideration strengthening the applicant's claim that they have a triable issue.  Moreover, if there were no injunction the respondents would be quite unrestricted as to whatever form they took of promoting the name Brand Power, whether on the Internet or on other forms of media. 

20                  I turn then to the balance of convenience.  I think it strongly favours the applicant.  The applicant has been the registered proprietor of the mark for 10 years.  Any further use by the respondents, even with the disclaimer suggested by them, will run the serious risk of dilution of the mark.  The respondents on the other hand have no existing business.  If they turn out to be successful at trial, they will have a damages claim for loss of profits.  Moreover, they already have an existing business of the same or very similar nature under the name Engineering Solutions and will be quite at liberty to continue their business under that name. 

21                  So, upon both the applicant and Timothy Joseph Buchanan, a director of the applicant, giving the usual undertaking as to damages, I will make the following orders:

1.         The first and second respondents, whether by themselves or by their directors, agents or servants, be until the hearing and determination of the proceeding or further order restrained from using the in any way in the course of trade without the licence of the Applicant:

(a)        the mark “BRAND POWER” or any other word or words substantially identical or deceptively similar to the mark “BRAND POWER” whether alone or as part of any mark in relation to:

(i)         printed matter including books, catalogues, magazines and advertising literature, stationery, paper and cardboard (“Promotional Goods”);

(iv)              goods of the same description as the Promotional Goods;

(v)                services closely related to the Promotional Goods.

(b)        the mark “BRAND POWER” or any other word or words substantially identical or deceptively similar to the mark “BRANDPOWER” whether alone or as part of any mark in relation to:

(iv)              advertising and marketing services; information and publicity services, telephone advertising including publication of directories and catalogues; and business services falling within Class 35 (“Promotional Services”);

(v)                services of the same description as the Promotional Services;

(vi)              goods closely related to the Promotional Services.

2.         The first and second respondents, whether by themselves or their agents or servants, be until the hearing and determination of the proceeding or further order restrained from using the domain names ‘brandpower.com’ and ‘brandpower.tv’.

3.         The applicant file and serve a statement of claim on or before 31 January 2003.

4.         The respondents file and serve a defence and cross-claim on or before 21 February 2003.

5.         The applicant file and serve a reply and defence to cross-claim (if any) on or before 14 March 2003.

6.         The proceeding be referred to mediation before a registrar to be held before 28 February 2003.

7.         The proceeding be adjourned to a directions hearing to a date to be fixed in March 2003.

8.         Costs are costs in the cause.

Associate:

Dated:              6 February 2003