Federal Court of Australia

Vitaco Health IP Pty Ltd v AFI Cosmetic Pty Ltd [2023] FCA 1463

ORDERS

THE COURT NOTES THAT:

A.    The Applicant gives the usual undertaking as to damages in the form set out in the Usual Undertaking as to Damages Practice Note (GPN-UNDR).

THE COURT ORDERS THAT:

1.    Until the first day of trial or until further order:

(a)    An injunction ordering that the First Respondent by itself, its servants, its officer or howsoever otherwise cease continuing to publish, and desist from further publishing, the websites appearing at <healtheries.net> and <healtheries.net.au>.

(b)    An injunction ordering that the First Respondent by itself, its servants, its officer or howsoever otherwise cease using the trade marks the subject of Australian Trade Mark Registration numbers 514257 and 1220216 in relation to any goods or services that are the same, similar or closely related to goods or services specified in such registrations.

(c)    An injunction ordering that the First Respondent by itself, its servants, its officers or howsoever otherwise cease publishing reproductions, or substantial reproductions, of the artistic works depicted as follows:

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

REASONS FOR JUDGMENT

ROFE J:

1.    Introduction

1    On 14 November 2023, the applicants filed an originating application seeking an urgent interlocutory injunction to restrain the ongoing online publication of two identical websites by the First Respondent which the applicants submit infringe the First Applicant’s trade marks and copyright works, and are misleading.

2    The applicants rely on the affidavit of Mr Craig Kearney, a director of both applicants and their parent company, and CEO of the Second Applicant, affirmed on 15 November 2023. They also rely on two affidavits of their lawyer, Mr Leonard Hickey, a partner at Cornwalls, affirmed on 14 and 15 November 2023.

3    As set out in a third affidavit of Mr Hickey, affirmed on 21 November 2023, the applicants served a copy of the originating application, statement of claim and the three affidavits referred to above on the First Respondent at both its registered postal address and registered email address.

4    This matter came before me in my capacity as duty judge. The applicants filed written submissions before the hearing.

5    I heard the interlocutory application on 22 November 2023. Both respondents did not appear. That day I made an order granting the injunctions sought in an amended form. These are the reasons for those orders.

2.    Summary and Background

6    The First Applicant (VHIP) and the Second Applicant (VHAU) are part of the same corporate group of companies (Vitaco). Vitaco Holdings Ltd is the parent company of both applicants.

7    The applicants seek an interlocutory injunction to restrain the ongoing online publication of two identical websites by the First Respondent that contain, what the applicants submit, are flagrant infringements and highly misleading material directed at Australian consumers (including a statement falsely indicating the First Respondent had "partnered" with Vitaco). The interlocutory injunction is sought against the First Respondent only. The applicants submit that, as the First Respondent controls both the websites, it is unnecessary to seek interlocutory orders against the Second Respondent.

8    Within Vitaco, VHIP is the intellectual property holding company and owner of the following registered trade marks:

(a)    514257 for "HEALTHERIES" (Word mark); and

(b)    1220216 for the image below (Series mark), in all colours as well as the red and green version:                        

9    Both trade marks are registered for, inter alia, cosmetics (which includes skin care products and cosmetic face masks) and dentifrices (better known as toothpaste), including children's toothpaste in class 3 (collectively, the VHIP Registrations). VHAU has engaged in authorised use of the registered trade marks over many years.

10    VHIP is also the owner of copyright in (Healtheries Logo) and (the Healtheries "H" Logo).

11    Vitaco markets and sells a range of consumer products in the health food, sports nutrition and supplements categories. The Vitaco family of brands includes:

(a)    "Musashi", which is a sports nutrition brand;

(b)    "Aussie Bodies", which is a brand of healthy bars and snacks;

(c)    "Nutra-Life", which is a supplements brand; and

(d)    "Healtheries", which is a health food, sports nutrition, and supplement brand.

12    The "Healtheries" brand first originated in New Zealand in 1904. Products have been sold under this brand in Australia for at least 19 years, and Mr Kearney considered it was probably longer, as the “HEALTHERIES” trade mark was registered in Australia in 1989. Further, products have been sold under the Healtheries Logo in Australia for approximately 15 of those years.

13    The Healtheries brand has also been promoted online at www.healtheries.com.au (Healtheries Website) and on various social media channels. The Healtheries Website has prominently displayed the Healtheries Logo and Healtheries "H" Logo for a number of years: since at least 2009 for the Healtheries Logo and since around 2021 for the Healtheries "H" Logo. VHAU is the registrant of <healtheries.com.au> and the use of registered trade marks on that website is with VHIP's knowledge and authority.

3.    First Respondent’s websites

14    The relevant websites, which are the subject of the application, are located at www.healtheries.net and www.healtheries.net.au (the AFI Websites).

15    Mr Hickey annexed a collection of screenshots of the AFI Websites to his first affidavit. Publicly available records disclose that the website containing the .au country code top level domain (healtheries.net.au) is registered in the name of the First Respondent.

16    The publicly available records hide the identity of the registrant for the domain name with the .net generic top level domain (healtheries.net). However, I was taken to a series of screenshots taken on both websites. A comparison of those screenshots showed that the two websites had almost identical content. Mr Hickey annexed a copy of document entitled “Domain Report – HealthEries.net.au” (Domain Report). The first page of the Domain Report stated:

This report documents a thorough analysis of the Internet domain name "HealthEries.net.au". It draws on the extensive Domain Tools dataset and aims to deliver a comprehensive view of the domain's ownership profile, key historical events and technically linked domain names.

All data in this Report is, or was, freely available through standard Internet DNS and query protocols. DomainTools has not altered the data in any way from its original form, except in certain instances to format it for readability in this Report.

Data from DomainTools is presented as-is, and as captured from the original source. We make no representations or warranties of fitness of any kind.

17    Under a heading “Connected Domains Shared IP addresses”, the Domain Report stated that “Domain Tools uses proprietary techniques to discover other domain names that are hosted on the same IP address (web host) as HealthEries.net.”. Healtheries.net.au was one of the websites listed as having a shared IP address with Healtheries.net. On the basis of the shared website host and the almost identical website content, I am prepared to infer that both websites are controlled/operated by the same entity – the First Respondent.

18    The applicants submitted that the AFI Websites contain content that “blatantly mimics” the Healtheries Website and they contain exact reproductions of the Healtheries Logo and Healtheries "H" Logo and other content, including the following examples.

19    In reproducing the applicant’s logos, the applicants observed that the First Respondent uses the same SVG image files, which they submit demonstrate that the logos are direct copies taken from the Healtheries Website. Mr Hickey, who has experience in website design, downloaded copies of two images from the AFI Websites. Mr Hickey described downloading two “SVG” images from the AFI Websites:

On 16 October 2023, I downloaded two SVG images from the AFI Websites as

follows (AFI Images):

(a) An image located at http://healtheries.net.au/assets/logo2-84740e48.svg which I reproduce as follows:

(b) An image located at http://healtheries.net.au/assets/logo-755786b0.svg which I reproduce as follows:

20    Mr Hickey also downloaded two images from the Healtheries Website which were identical to the two images that he downloaded from the AFI Websites. According to Mr Hickey, SVG code is in the form of text which can be opened in standard Microsoft Word. Mr Hickey annexed to his first affidavit the code for the four SVG images. Mr Hickey analysed and compared the computer code contained in each of the four SVG images and concluded that they were identical. On the basis of the identical code, Mr Hickey considered that the images from the AFI Websites were literal copies of the images on the Healtheries Website.

21    In addition to reproducing the Healtheries Logo and Healtheries "H" Logo, the First Respondent has also reproduced the same Chinese characters that are used to transliterate references to Vitaco's Healtheries goods for Chinese-speaking consumers in Australia. Vitaco has used these Chinese characters in Australia since at least 2013 to promote its products to its "significant customer base of Chinese speaking consumers”.

4.    Principles

22    The relevant principles relating to the grant of an interlocutory injunction are well known: Samsung Electronics Co Ltd v Apple Inc (2011) 217 FCR 238 at [52]–[74] (per Dowsett, Foster and Yates JJ). Vitaco must show:

(a)    there is a serious question to be tried as to VHIP or VHAU's entitlement to relief; and

(b)    the balance of convenience and justice favours the granting of an interlocutory injunction.

23    The Full Court at [67] in Samsung recognised that the issue of whether an applicant has made out a prima facie case and whether the balance of convenience favours the grant of an interim injunction are related enquiries.

24    When assessing the balance of convenience, the Court must also consider whether VHIP or VHAU are likely to suffer injury for which damages will not be an adequate remedy: Samsung at [62] (per Dowsett, Foster and Yates JJ).

4.1    Serious question to be tried

4.1.1    Trade Mark Infringement

25    The VHIP Registrations are registered for all goods in class 3, including cosmetics (which includes skin care products and cosmetic face masks) and dentifrices (which includes children's toothpaste).

26    Section 120(1) of the Trade Marks Act 1995 (Cth) (TMA) states:

A person infringes a registered trade mark if the person uses as a trade mark a sign that is substantially identical with, or deceptively similar to, the trade mark in relation to goods or services in respect of which the trade mark is registered.

27    The AFI Websites contain numerous examples of the word HEALTHERIES and the Healtheries Logo being used as trade marks.

28    The AFI Websites are clearly accessible from Australia, and directed and targeted at Australian consumers of the goods promoted therein. Therefore, the usages of the infringing marks are use of trade marks “in Australia” for the purposes of the TMA: Christian v Societe Des Produits Nestle SA (No 2) (2015) 115 IPR 421 at [77]–[78] (per Bennett, Katzmann and Davies JJ).

29    In addition to one of the AFI Websites being hosted on a .au domain name, the contents of these websites includes:

(a)    numerous references to Australia, and national symbols indicating the website is Australian, including Australian flags, Australian map images and images of koalas;

(b)    statements alleging that sales have occurred, and do occur, in Australia (such as in the extract below); and

(c)    express reference in content to the Australian .au domain name.

30    I note in relation to (b) above that the AFI Websites themselves do not appear to have a sales element. Rather, they appear to be performing an advertising and marketing role.

31    It would appear from the evidence of Mr Kearney that the AFI Websites are "marketing sites" in that they do not allow for online purchase functionality. Purchases of goods must be made elsewhere.

32    Mr Kearney conducted investigations into where such goods might be purchased. He was unable to find any such online or physical means of purchase. Hence, whilst, as Mr Kearney observed, the AFI Websites expressly say goods have been sold in Australia "through mother and baby chain stores", and there is certainly an offering to sell in Australia, no such actual sales can be located.

33    When it comes to the goods promoted on the AFI Websites, these include skin care products, cosmetic face masks and children's toothpaste. All such goods are covered in the class descriptions of both the VHIP Registrations for the purposes of s 120(1) of the TMA (or, at the very least, similar to such goods for the purposes of s 120(2)).

34    I am satisfied on the evidence before me that there is a strong prima facie case for VHIP seeking relief under the TMA for trade mark infringement.

4.1.2    Copyright Infringement

35    As set out above, the Healtheries Logo and the Healtheries "H" Logo (referred to collectively as the Artistic Works) appear throughout the AFI Websites.

36    For the purposes of the interlocutory injunction application, I am satisfied that copyright in the Artistic Works is owned by VHIP. Mr Hickey set out the evidence of ownership in his first affidavit as follows:

(a)    In or around 2007, the Artistic Works were authored in New Zealand. By reason of it directing or commissioning the creation of these works, the first owner in copyright under New Zealand law was Nutra-Life Health and Fitness (NZ) Ltd (NHF).

(b)    On 30 September 2023, NHF amalgamated with other companies to become Healtheries of New Zealand Ltd (HONZ). By reason of this amalgamation, HONZ then became owner of the copyright in the Artistic Works under New Zealand law.

(c)    On 8 November 2023, HONZ fully assigned all copyright in the Artistic Works to VHIP. This expressly included "all rights to prosecute … any claims and proceedings, and to obtain and retain relief and remedies (including damages and an account of profits) for any cause of action (including infringement) arising at any time (including before, on or after the date of [the assignment deed]) in respect of [the Artistic Works]".

37    Under s 21 of the Copyright Act 1994 (NZ), where a person commissions and pays for the making of a painting, drawing or diagram, and the work is made pursuant to that commission, the person commissioning the work is the first owner of any copyright in the work. Accordingly, whether the Artistic Works were made by employees of NHF or pursuant to a commission, NHF will be the first owner of copyright in the Artistic Works.

38    The applicants have not authorised the First Respondent to use the Artistic Works on the AFI Websites, or at all.

39    I am satisfied on the evidence before me that there is a strong prima facie case for the applicants to seek relief for copyright infringement under s 36 of the Copyright Act 1968 (Cth).

4.1.3    Breaches of the Australian Consumer Law

40    The AFI Websites contain statements indicating that the First Respondent has "partnered with" Vitaco in providing Healtheries branded goods. In particular, it states:

41    The applicants submitted that the use of the registered trade marks, Healtheries "H" Logo and references to the brand being founded in "1904" in New Zealand clearly indicates that the First Respondent is specifically representing it has "partnered with" Vitaco (the Partnership Representation). Given the long history of the Healtheries brand, consumers will understand the Partnership Representation as a reference to partnership with Vitaco. The applicants further submitted that the First Respondent puts it beyond doubt that it is clearly representing to consumers that it has partnered with "Vitaco" when it expressly states on another page of the AFI Website that the "BRANDBELONGS TO VITACO GROUP" (sic):

42    According to Mr Kearney, the Partnership Representation is false — it has no factual basis and ought to have never been made.

43    The applicants contended that the Partnership Representation will be understood as a reference to "Vitaco" and is located on website targeting Australian consumers. Therefore, it is highly likely to mislead such consumers.

44    Section 18(1) of the Australian Consumer Law (sch 2 of the Competition and Consumer Act 2010 (Cth)) states:

A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.

45    Section 29(1) of the Australian Consumer Law states:

A person must not, in trade or commerce, in connection with the supply or possible supply of goods or services or in connection with the promotion by any means of the supply or use of goods or services:

…

(g) make a false or misleading representation that goods or services have sponsorship, approval, performance characteristics, accessories, uses or benefits; or

(h) make a false or misleading representation that the person making the representation has a sponsorship, approval or affiliation.

46    I am satisfied on the evidence before me that the applicants have established a strong prima facie case that the First Respondent has contravened both s 18(1) and s 29(1)(g) and (h) of the Australian Consumer Law by making the Partnership Representation.

4.2    Balance of convenience

47    For the reasons set out above, I am satisfied that the applicants have a strong prima facie case for relief under the TMA, the Copyright Act and the Australian Consumer Law.

4.2.1    Detriment to AFI

48    The first interlocutory order sought simply requires that the First Respondent remove from publication the AFI Websites. This proposed order does not require deletion or permanent destruction of any computer files or documents relating to the AFI Websites. It requires the websites be taken down so that they may not be viewed by consumers.

49    The second and third interlocutory orders sought require the cessation of infringing conduct.

50    In essence, the proposed interlocutory orders will require the First Respondent to take down a website in circumstances where there is no evidence indicating that they would suffer any loss of sales or other financial loss whatsoever. Further, the practical process of complying with the proposed orders and taking down the AFI Websites is a simple one. Mr Hickey, after attesting to his experience in website building and maintenance, stated in his first affidavit:

In my experience, removing content from a website is not generally a complicated or difficult task and it may be achieved in multiple ways. For example, if a content management system (CMS) has been used to build the website, the CMS can be accessed by the operator of the website to selectively remove content so that it is no longer accessible to the public.

Another way to remove website content is to adjust the settings for the domain name for the website. Changing domain name settings is a relatively simple matter, and it is not difficult to take down an entire website by changing the domain name settings accordingly. It is also common for Registrars with whom domain names are registered to provide a facility that enables domain name registrants to use a "holding" page that displays minimal content.

51    The First Respondent did not appear at the hearing and did not file evidence as to any potential detriment that it would suffer if the injunctions sought were granted. There appears to be little likely detriment to the First Respondent if the injunctions are granted.

4.2.2    Detriment to the applicants

52    The inconvenience to VHIP and VHAU if interlocutory relief is not granted is substantial. Mr Kearney gave evidence that both VHIP and VHAU will be affected by reputational damage to the Healtheries brand: VHIP as the owner of the VHIP Registrations and VHAU as an entity that promotes and sells Healtheries as a member of the Vitaco group. VHAU is also the owner of <healtheries.com.au> where the brand has been well promoted with over 19,000 visitors between August 2019 and August 2023.

53    Mr Kearney notes the difficulty in remediation if the AFI Websites are not taken down:

[I]t may become impossible to identify with precision how many of Vitaco's prospective customers have been misled and led to believe the website promotes Vitaco's goods. It may be equally impossible to target corrective marketing or advertising at those same prospective customers to attempt to address such confusion.

4.2.3    Detriment to third parties

54    The applicants submitted that there was also the potential for third parties to suffer harm, given that the AFI Websites advertise children’s products, such as toothpaste, under the VHIP Registrations and Healtheries logo and “H” Logo without authorisation from the applicants.

4.2.4    Adequacy of damages - part of the balance of convenience

55    The applicants contend that the damage that they are likely to suffer is very difficult to measure and quantify. Whilst it may be possible in the future to measure the online traffic to the AFI Websites, such figures would not solve the difficulty of measuring loss and damage.

4.2.5    Balance of convenience conclusion

56    I consider that the balance of convenience heavily weighs in favour of granting the injunction sought by the applicants.

5.    Undertaking as to damages

57    I note that VHIP and VHAU have, through their solicitor, provided the usual undertaking as to damages.

6.    Conclusion

58    For the above reasons, I will grant the interlocutory injunction in the form set out at the start of these reasons.

Associate:

Dated:    24 November 2023