A recent decision of REA Group Ltd v Real Estate 1 Ltd examines issues of misleading or deceptive conduct, trade mark infringement and considers the implications of a brand owner using a domain name as a trade mark. The decision highlights that trade mark owners should seek registration for brands that comprise a domain name, and businesses trading online should actively monitor domain names that include their trade mark.

REA Group Ltd v Real Estate 1 Ltd

The real deal

In 1998, people still bought and read newspapers in hard copy. Newspapers would include sections relating to real estate, both residential and commercial. At the same time, the internet was getting bigger. REA Group (REA) had the forethought to start up online, and registered its domain name Realestate. com.au.

It commenced listing residential properties that are available to rent or buy. In 2002, this was followed by commercial properties at the domain realcommercial. com.au. Trade marks were registered. Business increased and within 10 years the two sites became the dominant domains for real property listings in Australia. Since 2009, Real Estate 1 (RE1) also operates two property search portals. The first, realestate1.com.au, focuses on residential properties. The second, realcommercial1.com.au, focuses on commercial properties.

Trading places

REA has three composite trade mark registrations (that is, marks that include both logo and words) relating to realestate.com.au. Realcommercial.com. au is subject of one composite trade mark registration. RE1 also had composite trade marks registered.

Click here to view trademarks.

Nerd alert: Technical stuff What is a domain name?

A domain name consists of at least two parts, known as labels or levels, which are separated by full stops. The two essential components are:

  1. the top-level domain (for example, ‘.com’ or ‘.org’, or a country code top-level domain like ‘.com.au’); and
  2. the second-level domain, which is the specific component of the domain name that is selected by the website owner (eg realestate or realestate1).

As the top-level (.com.au) is usually generic, consumers generally pay little attention to it compared to the secondlevel.

Concerns regarding misleading similarity between domain names generally focus on the second-level. In this case, the top-level component of the domain name (.com.au) was considered a key part of the brand in that it added distinctive elements to an otherwise very descriptive term.

Domain game

REA valued its trade marks. When RE1 started to operate and promote its competing websites, REA wasn’t happy. It commenced proceedings alleging misleading or deceptive conduct and trade mark infringement.

While REA accepted that “real estate” was purely descriptive, it argued that the combination of “real estate” with “.com.au” created a term which was distinctive of REA’s residential property portal, particularly considering the promotion of the brand as an online portal, and the inclusion of the ‘.com.au’ in its registered trade marks.

Not receptive to misleading or deceptive

REA argued that RE1’s promotion of its domain names was likely to mislead or deceive consumers, particularly those using a search engine (such as Google) to find realestate.com.au.

REA lost on this part of its claim.

The Court found that the use by RE1 of realestate1.com.au did not constitute misleading or deceptive conduct. Justice Bromberg noted the following:

  • ‡‡ Within the term “realestate.com. au”, each of the elements remained descriptive despite the combination of them into a single term.
  • When taken as one term of itself, “realestate.com.au” is, at least partly, descriptive of an online real estate portal. Therefore, only a small difference in a competitor’s trade name will likely be enough to avoid consumers being deceived.
  • ‡‡ It is only when “.com.au” is attached to “realestate” and the term “realestate.com.au” is viewed as a single expression that the term begins to suggest a connection with a particular business or brand. However, the very features (.com.au) which are essential for giving the term recognition as a name are features which other cases indicate will commonly be ignored or be given little substantive attention by consumers – both parts of the term are descriptive in and of themselves but together create a suggestion of connection with a brand.
  • ‡‡ The phrase “real estate”, in combination with a suffix to indicate a real estate portal, is used extensively in the online marketplace, in both trading and domain names. This “natural applicability” means that consumers using a search engine to find a real estate portal would be more cautious and vigilant in the context of that market where close variants of “realestate.com.au” are common on the results page of such a search.
  • ‡‡ A consumer who is searching for a portal recalled by the consumer as “real estate something” and ends up at RE1’s website has not been misled or deceived. If those consumers have been diverted, the fault may lie not with RE1 but with the adoption by REA of a name insufficiently distinctive to have allowed consumers to remember it more specifically.

In other words, when one combines two or more generic and descriptive phrases, the combined outcome may be that an identifiable and unique brand is developed. However, in this instance the online consumer is savvy enough to distinguish between the two websites.

What is interesting about the Court’s finding is that Justice Bromberg recognised that RE1 officials and representatives purposefully chose a rebranding strategy which involved use of trade marks which closely resembled those used by REA. However, Justice Bromberg noted that such behaviour, of businesses attempting to divert traffic from another website to their own, was not uncommon in the internet marketplace.

His Honour assessed “realcommercial. com.au” and “realcommercial1.com.au” separately from the realestate domain names, but came to the same conclusion. It was held that any likely deception in relation to “realcommercial1.com.au” would only have been momentary, and any consumer that was actually misled or deceived would have resolved that confusion upon accessing the realcommercial1. com.au site.

Mark my words… it ain’t over!

As well as alleging misleading and deceptive conduct, REA claimed that the use of “realestate1.com.au”, including as a domain name address, infringed REA’s registered trade mark rights in realestate.com.au as the two marks were deceptively similar. REA only claimed infringing use by RE1 in relation to “realestate1” when used in conjunction with “com.au” – not when “realestate1 was used in isolation.

REA was successful on this part of its claim.

The Court found that:

  • ‡‡ the “realestate1.com.au” mark was deceptively similar to the “realestate.com.au” registered mark
  • ‡‡ its use constituted trade mark infringement.

REA also took issue with RE1’s use of both “realcommercial” alone and its use in combination with “.com.au”. REA said that both of these uses infringed its trade mark rights, and the Court agreed.

While the Court made the above findings, it also found that:

  • ‡‡ RE1’s logo otherwise did not sufficiently resemble REA’s logo to be deceptively similar.
  • ‡‡ The term “realestate” in isolation is highly descriptive and would not be enough to establish brand identity.
  • ‡‡ In this case, the distinguishing feature of the mark is the domain name in its entirety. The inclusion of “.com.au” is therefore essential to the question of infringement.

Sceptical or confused? You’re not alone

Although a positive result for trade mark owners, the Court appeared not entirely comfortable with its outcome. From a superficial perspective it is not easy to reconcile how REA failed on a “misleading or deceptive” trade practices claim yet was successful on a “deceptively similar” trade mark claim. But of course law is anything but superficial.

There are also difficulties reconciling the aspects concerning the use and incorporation by REA of very generic and descriptive words into their “brand”. Justice Bromberg stated that “registration of REA’s realestate.com.au marks has effectively given REA a monopoly over two highly descriptive terms when used in combination...it is troubling that terms that are highly descriptive of a particular area of commerce and which provide significant commercial advantage should not be readily available for use by all who seek to participate in that commerce”. In the context of an online globalised economy, there will no doubt be some very difficult issues for courts to reconcile between domain names, trade marks and brand identity.

Take home messages

This case is a very good illustration of how particular conduct can amount to trade mark infringement even though it does not amount to misleading or deceptive conduct.

The test for infringement of a registered trade mark simply requires that two trade marks be considered sufficiently similar that a person seeing or hearing the trade marks might be caused to wonder whether they come from the same source. All you have to show is that the infringer’s trade mark is substantially identical or deceptively similar to the registered trade mark and that it’s being used in respect of the same or similar goods and services. It is enough that consumers might be “caused to wonder” whether there is connection between the competitor’s goods or services and yours. It is not necessary to prove that a consumer would be misled or deceived, as it is for a claim of misleading or deceptive conduct. This is one of the reasons that we encourage businesses to register their trade marks.

We register trade marks for a number of other reasons:

  • ‡‡ A registered trade mark is infringed when someone uses the same or a similar trade mark in respect of the same or similar goods or services. It’s not necessary to show that you have reputation in the registered trade mark. In fact, it’s a good idea to get your trade mark registered before you go to the time and effort of establishing reputation in the trade mark.
  • ‡‡ Having a trade mark on the trade marks register is an important part of trade mark protection because most people will check the register before they choose their own trade mark.
  • ‡‡ If others see your trade mark on the register, they are likely to choose a different trade mark. Registered trade marks are personal property and can be sold or transferred without having to sell the whole business. This is difficult to do with unregistered trade marks. This means that the registered trade mark has some intrinsic value in its own right and a company that has a portfolio of registered trade marks can point to that fact as a sign of its value.
  • ‡‡ Trade marks are valuable and can be used as security.

Actions for trade mark infringement should be considered in addition to actions for breach of copyright, misleading or deceptive conduct or passing off when the dispute relates to “brands” and/or domain names. Businesses operating online should also actively monitor websites and domain names similar to their own, and consider whether there are opportunities to confuse brands, or the goods and services supplied. It may be that as an alternative to legal action, complaints could be made regarding prospective trade marks.

While businesses should be aware of the dangers of using generic or descriptive names (the name may not even be accepted for trade mark registration), this decision highlights that when descriptive names may achieve a unique identity capable of protection when combined with other names.More generally, the decision serves as a timely reminder that trade mark owners should seek registration for unregistered marks or ensure and enforce existing registrations for brands that comprise a domain name.

A party might be able to get away with registering a domain name similar to, say, that of an established competitor and likewise attempt to capitalise by directing traffic to their site. However, should that domain name be sufficiently specific and/ or also be the subject of a registered trade mark, then that party risks a potentially adverse and costly outcome.