FEDERAL COURT OF AUSTRALIA

Shape Shopfitters Pty Ltd v Shape Australia Pty Ltd (No 2) [2017] FCA 474

REASONS FOR RULING

1    The applicant objects to certain evidence contained in the affidavit of Gregory James Henry affirmed on 8 December 2016. The applicant objects to Mr Henry’s evidence contained in paragraphs 22, 24, 25, 29, 37, 42, 45, 48, 51 and 55. The objections are that the evidence is hearsay, and or alternatively that the evidence should be excluded pursuant to the discretion in s 135 of the Evidence Act 1995 (Cth). To rule on the objections, it is necessary to set out the nature and context of the allegations in the proceeding.

Background and context

2    In this proceeding the applicant alleges that the respondent has made representations, which revolve around its use of the word “SHAPE” in its corporate name, and which constitute:

(1)    misleading or deceptive conduct or conduct that is likely to mislead or deceive in contravention of s 18 of the Australian Consumer Law;

(2)    the making of a false representation in contravention of s 29(1)(h) of the Australian Consumer Law; and

(3)    passing off.

3    Each of the parties is a commercial construction company. The nature and range of the commercial construction activities of each of the parties is in issue, at least as to what ought properly be characterised as its predominant commercial construction activity. The applicant has traded in Australia under the name Shape Shopfitters Pty Ltd since July 2012. The respondent changed its name from ISIS Group Australia Pty Ltd to SHAPE Australia Pty Ltd on 26 October 2015, for reasons that are immediately obvious.

4    Although the pleadings are more broadly expressed, as the matter has been opened at trial on behalf of the applicant, and reflected in its written submissions, there are now two basic contentions. The first is that, by the use of the name “SHAPE” in its corporate name, in its marketing and in its advertising, the respondent has made a false representation that there is an affiliation, connection, association or relationship between the applicant and the respondent. The applicant’s opening submissions put the contention in this way:

In particular, Shape Shopfitters submits that participants in the commercial construction industry would be falsely led to believe that there is a relationship between Shape Shopfitters and Shape Australia because of their shared use of the name SHAPE (sometimes in conjunction with a second word which is either generic or descriptive – ‘Shopfitters’ / ‘Australia’).

5    The applicant’s opening submissions continued:

An obvious conclusion to be drawn having regard to the similarity of their names is that Shape Shopfitters is the specialist shopfitting arm (or business unit) of Shape Australia (a larger and more general business). There is no such relationship.

6    From that alleged representation arises the applicant’s claim under the consumer law and in the tort of passing off.

7    The second contention maintained by the applicant is that the respondent has infringed its registered trade mark by promoting, providing and selling commercial construction services under and by reference to the name “SHAPE”, using a series of marks which are annexed to the applicant’s outline of opening submissions, and which also appear (at least in part) in [14] of the applicant’s amended fast track statement.

8    The applicant contends that its infringement case is made out on the basis that the word “SHAPE” is the essential feature of the SHAPE Registered Mark. On the trade mark infringement case, the parties are agreed that the real issue between them is whether the respondent’s use is the use of a mark that is deceptively similar to the applicant’s registered mark.

9    The respondent disputes that its use of the word “SHAPE” is the use of a mark which is deceptively similar to the applicant’s registered mark. Further it disputes that the use of the word SHAPE in its corporate name, in its marketing and in its advertising, conveys any representation that the applicant is the shop fitting arm of the respondent. The basis for its dispute is said in its opening submissions to be three fold:

(1)    The relevant class of consumers (for both parties) is a sophisticated class, with specialised knowledge of the industry and not a class likely to be misled;

(2)    the work comes to each of the parties through a “careful and considered process that further reduces any risk of confusion”; and

(3)    there is no evidentiary basis for an inference that consumers would be misled in the way for which the applicant contends.

10    The latter refers back to the narrowed representation which is the basis of the applicant’s case under the Australian Consumer Law and in passing off.

11    As part of its response to the applicant’s case, the respondent submits the Court should reject the applicant’s evidence about alleged confusion between the applicant and the respondent. A number of witnesses were called on behalf of the applicant to give evidence of such alleged confusion. Similarly in the trade mark infringement case, the respondent submits that the question of whether the two marks are deceptively similar when considered in the context of the likely consumers of these services should be answered in the negative, because buyers of shop fitting services are experienced and knowledgeable and know the industry well. Confusion, the respondent submits, amongst this class of consumers is unlikely.

evidence objected to

12    With this background, I turn now to the evidence to which an objection has been taken as set out in [1] above. Junior counsel for the applicant submitted that the same objection covered all the paragraphs of Mr Henry’s affidavit to which objection is taken. Those paragraphs deal with internet searches conducted by Mr Henry for a number of business names containing the word “shape”. For example at [22], Mr Henry deposes to a search he conducted on 31 August 2016 on the internet for “Shape Building”. He then deposes to the results of that internet search and exhibits to his affidavit a series of screen shots from a webpage with a particular URL which constituted the results of that search. Similarly at [29], Mr Henry deposes to conducting internet searches for “Shape Developments”, and then deposes to the results of those internet searches, including exhibiting to his affidavit screen shots of the results of those searches. Screen shots include, for example, a Facebook page maintained in the name of “Shape Developments”.

13    Mr Henry then deposes to searches of Australian Securities and Investments Commission and Australian Business Register records for various corporate entities with names that include the word “shape”, such as “Shape Australia (QLD) Pty Ltd”, “Shape Australia Holdings Pty Ltd”, “Shape Design”, and “Shape Property Developments”. There is no objection taken to these paragraphs of Mr Henry’s affidavit, I assume because the searches conducted related to public records.

14    However objection is then taken to Mr Henry’s evidence about his internet searches for another entity – “Shape Consulting”. Similar objections are taken to “Shape Project Management Pty Ltd” (see [42]); “Shape Builders Pty Ltd” (see [45]); “Shape Joinery & Design Pty Ltd” (see [48]); “Shape Fitouts Pty Ltd” (see [51]); and “Shape Finance (Aust) Pty Ltd” (see [55]).

15    Junior counsel for the applicant submitted that all Mr Henry’s evidence demonstrated was that when one logged onto a website on a particular date (the dates given by Mr Henry were between 31 August 2016 and 28 October 2016) the screen shots annexed to his affidavit are what appeared on the webpage on that date. The submission was that this evidence is of no probative value in showing a proliferation in the relevant marketplace of the use of the word “shape” by other businesses at or around the same time as the alleged conduct of the respondent. That is because, on the applicant’s submission, all the evidence does is show the use of that word on a particular date on a particular website. It is not probative, the applicant submits, of what has happened since the adoption and launch of the respondent’s use of the name SHAPE. For that reason, the applicant submitted the evidence ought to be excluded under s 135 of the Evidence Act. The submission suggested the probative value of this evidence was substantially outweighed by the danger the evidence might be unfairly prejudicial because, in showing a state of affairs on a particular date, it is unrepresentative, misleading or confusing. Further, admitting the evidence could cause or result in undue waste of time because the applicant would be required to answer evidence that only deals with a snapshot of the use of the word “shape” in the “marketplace” (a term used by junior counsel for the applicant to mean “a relevant industry”) on a particular day. Junior counsel’s submissions were not quite in these terms, but that is how I understood the thrust of what he said.

16    There was also an objection on the basis of hearsay. The submission by the applicant is that the purpose of tendering this evidence is to prove that the statements extracted by Mr Henry in the exhibits to his affidavit were true: that is, that on the date specified, the corporate entities named were using a business name or trading name that included the word “shape”.

17    In response, junior counsel for the respondent submitted first that the documents were being tendered for a non-hearsay purpose: that is they were relevant to show that the businesses concerned purported to be trading by reference to those names on a particular date. She emphasised “purported”, in the sense that any person searching for a business in the construction/shop fitting industry with the word “shape” would, on the dates specified by Mr Henry, have seen these webpages which use the word “shape” in their business or trading names (just as the respondent did) and would have been required to distinguish between all those businesses using that word in their names. Whether or not the names on the website were, in fact, the names of the businesses was not the point. She submitted this was not a hearsay purpose.

18    As to the date of the searches, junior counsel submitted that what was visible on the internet by way of searches between August 2016 and October 2016 was not irrelevant to the issues before the Court in circumstances where the applicant was seeking injunctive relief against the respondent, to restrain it from continuing to use the name “SHAPE Australia” into the future. In that sense, the fact that the searches were done after proceedings were commenced and well after the respondent commenced using the name “SHAPE Australia” was not to the point.

19    In response, junior counsel for the applicant submitted that (accepting for the purpose of this submission there was relevance to the dates between August and October 2016) the appropriate way to prove what consumers in the marketplace could have discovered through an internet search would be to have called evidence from those consumers. He submitted that the fact of simply producing internet searches precluded the applicant from cross-examining any of the individuals responsible for running these business and denied it an opportunity to test the asserted inference sitting behind the evidence that no confusion arose through these businesses’ use of the word “shape” in their business or trading names, or no confusion specific to the respondent’s use of the word “shape” in its business name. He submitted the evidence gave nothing more than a snapshot and was a shorthand and inadequate way for the respondent to seek to establish a lack of confusion in the market place due to other uses of the word “shape”.

Authorities in relation to the admissibility of internet searches

20    There are at least two decisions which have considered that such evidence is not admissible on the basis of hearsay. The New South Wales Court of Appeal considered similar evidence in Athens v Randwick City Council [2005] NSWCA 317; 64 NSWLR 58. The evidence in question was obtained by searches on the website www.google.com.au, and included contents of the relevant webpage of “Aegean Lodge”, and listings on third party websites referring to the “Aegean Lodge”. In a brief paragraph, Hodgson JA, with whom Santow and Tobias JJA agreed, said (at [65]) that this material, being the content of the websites, was not admissible as hearsay even though it had possible marginal relevance. His Honour further considered that:

This evidence is so weak on its own, that it may well have been appropriate to exclude it under s.135.

21    Flick J in E & J Gallo Winery v Lion Nathan Australia Pty Limited [2008] FCA 934; 77 IPR 69 considered in obiter whether an internet search of archived material using the “Internet Archive WayBack Machine” was admissible. This is similar to the evidence contained in [24] of Mr Henry’s affidavit, which also relied on an internet search of archived material using the “Internet Archive WayBack Machine”. Flick J’s decision was ultimately the subject of a successful appeal to the High Court: E & J Gallo Winery v Lion Nathan Australia Pty Ltd [2010] HCA 15; 241 CLR 144. However, his Honour’s comments on this issue were not subject to appeal. His Honour held that, were it necessary for him to resolve the issue, he would have rejected the internet search evidence on the basis that the representations in the archive material were hearsay. His Honour stated, at [129]:

…the reliability of the results of the web search undertaken by Mr Weeks was also open to serious doubt and raised questions as to who it was that recorded the information and how accurately that task was undertaken.

22    This was particularly given that his Honour considered, at [127]:

Nothing is known as to the ‘business’ of the ‘Internet Archive Wayback Machine’ other than the hearsay statement itself that it ‘allows people to visit archived versions of Web sites’. And nothing is known as to the knowledge of the persons who recorded the information.

23    His Honour’s reasoning is applicable to this proceeding, in circumstances where, as junior counsel for the applicant submitted, no evidence has been adduced to this Court in relation to the provenance of the Internet Archive WayBack Machine.

Ruling

24    In my opinion the evidence sought to be adduced by the respondent is clearly hearsay within the meaning of s 59 of the Evidence Act. The statements made on various internet sites of other corporations or business entities (including the archived material to which Mr Henry deposes in [24] of his affidavit) constitute a previous representation made by the person or persons who constructed the website, wrote the text and inserted the graphics. The purpose of adducing evidence of those statements of text and graphics is to prove the existence of a fact it can reasonably be supposed was intended by the drafter of the text and the person who constructed the graphics. The fact is that there were business entities trading on the dates specified (between August and October 2016) in the industries and markets set out on the pages exhibited by Mr Henry, in the locations those webpages identified using the names those webpages identified. It is the actual existence of those business entities, the names they were using, the industries and markets in which they were trading, the services they were offering and the locations in which they were offering those services which the respondent in my opinion seeks to use as part of its case to prove that there was no confusion in the marketplace generated by its use of the word “shape” in SHAPE Australia.

25    Although these aspects of Mr Henry’s evidence are not the subject of any particular submissions in the respondent’s opening submissions, I infer that the respondent seeks to use this evidence to support submissions of the kind I have identified above: namely that the respondent has carved out for itself in a very different kind of marketplace its own reputation not specifically as a shop fitter but as a corporation that manages specialist trade contractors and consultants working as a much larger business than the applicant in circumstances where there are numerous businesses existing in the Australian construction and shop fitting industry that use the word “shape”. I infer the respondent may submit, on the basis of the evidence, that there are many other businesses using the world “shape” in their trading activities, so that the particular representations the applicant alleges cannot be proven.

26    Even if I had not been satisfied that this evidence was adduced for a hearsay purpose, I would have in any event exercised my discretion to exclude the evidence under s 135 of the Evidence Act on the basis that the probative value of the evidence is substantially outweighed by the danger of prejudice to the applicant. I accept the applicant’s submission that Mr Henry’s evidence in these paragraphs constitutes no more than a snapshot of what was available through a series of internet searches on a particular date, without any context being available to be tested about the nature of the businesses these searches have turned up. The probative value of such searches is limited on any view. The applicant’s case is a very specific one about what participants in the commercial construction industry may or may not be led to believe concerning the relationship between the applicant and the respondent, and whether the applicant might be seen as no more than a “specialist shop fitting arm” of the respondent. To have evidence in the nature of single date extracts of internet searches showing businesses using the word “shape”, without calling evidence from witnesses who operate or control those businesses, and allowing the applicant to test the similarities or differences between those businesses and its own, between the customer base(s) of those business and its own, and in turn between those businesses and the respondents, is in my opinion to create a danger of unfair prejudice to the applicant. Snapshots of internet searches on particular dates, all of which are between just under and just over a year after the respondent adopted the name “SHAPE Australia” contribute little by way of proof as to what participants in the commercial construction industry were likely to believe about the commercial relationship between the applicant and the respondent since 26 October 2015, but it is not the kind of evidence the applicant can test as it should be able to. Accordingly, in my opinion the objections of the applicant should be upheld. The paragraphs of Mr Henry’s affidavit to which I have referred at [1] will not be admitted.

Associate:

Dated:    9 May 2017