Hotels and resorts regularly complain to hotel internet marketers to stop using ‘their’ place name to market other accommodation.
Thredbo Alpine Village sued ThredboNet to stop it from using Thredbo in its internet marketing of accommodation at Thredbo.
In a legal decision with ramifications for the travel and leisure industries, the Federal Court of Australia has refused Thredbo Alpine Village’s bid to reserve the place name Thredbo for its exclusive use.
The decision is Kosciuszko Thredbo Pty Limited v ThredboNet Marketing Pty Limited [2014] FCAFC 87, a full court joint judgment of Justices Siopis, Rares & Katzmann.
Why was the name Thredbo worth fighting over?
Thredbo is a ski resort and village at the foot of the Thredbo River Valley, in the Snowy Mountains of New South Wales.
Kosciuszko Thredbo (an Amalgamated Holdings company) is long established as the owner and operator of “Thredbo Alpine Village”. It holds a 99 year lease which was granted in 1957 over all of the land at Thredbo. Thredbo Alpine Village is well developed and consists of the Thredbo Resort, the Thredbo Alpine Hotel, a ski school, a leisure centre, a childcare centre, and services and infrastructure. It compares itself to Disneyland because it occupies “a unique position of control over the resort”.
It owns the “Thredbo Alpine Village” business name and trade mark, and uses domain names including www.thredbo.com.au in its marketing.
Thredbo Alpine Village said that it had acquired a distinctive right to use the place name Thredbo in its marketing because of its long established operation and reputation.
ThredboNet is a small holiday accommodation provider at Thredbo which was established relatively recently.
It markets accommodation on the internet. It owns domain names such as www.thredboreservations.com.au and www.thredbo.com, has websites and a Facebook page entitled “Thredbo Reservations”.
Why did Thredbo Alpine Village fail in its bid to protect its right to use the place name Thredbo in the Federal Court?
Thredbo Alpine Village gave two reasons why ThredboNet should not be allowed to use the word Thredbo. The first was that ThredboNet was likely to mislead the public into thinking that they were looking at its website. The second was that ThredboNet was in breach of its sub-lease covenant not to use the word Thredbo.
Misleading conduct / passing off
It is a breach of sections 18(1), 29(1)(g) & (h) of the Australian Consumer Law and also the tort of “passing off” to display a website which is deceptively similar in ‘get-up’ and appearance to a competitor’s website. In this case, the use of the place name Thredbo was the only similarity between the websites.
Kosciuszko Thredbo argued that Thredbo was more than a geographic place name, because its close association with Thredbo Alpine Village had given it a secondary meaning as a “complete branded entity”.
The Federal Court examined Google screenshots of the searches for Thredbo, and Thredbo reservations and found that they showed a variety of links to traders other than ThredboNet and Thredbo Alpine Village, which used Thredbo as part of their name. This negated the argument that Thredbo was distinctive to the Thredbo Alpine Village business.
ThredboNet had also placed a disclaimer on its home page, which stated: “Please note this is NOT the official website of ... Thredbo Alpine Village ... and is not approved, endorsed or sponsored by them.” The Federal Court considered that this disclaimer was effective to dispel any confusion between the websites.
The Federal Court said that booking holiday accommodation was not an impulsive purchase: “the ordinary reasonable consumer looking for holiday accommodation at a resort such as Thredbo would be careful about making a selection of the provider, the accommodation and the price.” That is, online consumers are not easily misled and are likely to click on several results in a web search.
Therefore, the Federal Court decided that the ordinary reasonable consumer would not be likely to be misled by ThredboNet’s use of its domain names, websites and Facebook page into thinking they were dealing with Thredbo Alpine Village.
The sub-lease covenant
The sub-lease of the accommodation leased by ThredboNet contained a covenant that “The Sublessee must not use ... the word ‘Thredbo’ in connection with any business carried on by the Sublessee” with the exception of allowing “members of the public to occupy the Premises”.
Kosciuszko Thredbo argued that their use of the word Thredbo “was not in the same class as the name of a suburb but was more ... like the brand name of a shopping centre developer.” The Federal Court did not accept the argument. It pointed out that if the covenant were read literally, it would not allow the address to be advertised.
The Federal Court decided that the covenant was not effective to prevent ThredboNet from using the word Thredbo in its marketing. In any event, the covenant was void as an unreasonable restraint of trade.
What are the lessons to be learned?
Hotel internet marketers use the internet to market hotels and resorts. By doing so, they are digitally disrupting the holiday accommodation industry. Think of websites such as expedia.com.au, booking.com.au, stayz.com.au, tripadvisor.com.au, trivago.com.au, au.hotels.com and wotif.com.
The Federal Court decision means that hotel internet marketers are able to prominently display the geographic place name when marketing accommodation.
Kosciuszko Thredbo has paid the price for its complacency in pursuing its internet marketing strategy. Instead of relying only upon www.thredbo.com.au and the lease covenant, it needed to have adopted an effective digital marketing and social marketing strategy to protect its rights to use the name Thredbo.
A marketer’s perspective follows.
Marketing Commentary provided by Michael Field, Managing Director of Michael Field Strategic Marketing Consultants
“The best place to hide a dead body is on the second page of Google” - Unknown
The Federal Court decision has serious ramifications for marketers in the travel, destination and accommodation industries.
Not only has Thredbo Alpine Village (Kosciuszko Thredbo) lost its ability to protect its hard-earned brand name, but by failing to implement an effective digital strategy it has cleared the way for competitors to dominate in the lucrative search engine rankings market.
- The battle for mindshare has irreversibly shifted from brand to browser in the travel and accommodation industries as travellers increasingly use the internet to research and book travel and accommodation
This can be seen from how often the term ‘Thredbo’ is searched online every month in Australia:
- ‘Thredbo’ is searched ~ 40,500 times
- ‘Thredbo weather’ is searched ~ 8100 times
- ‘Thredbo accommodation’ is searched ~ 5400 times
- ‘Thredbo alpine hotel’ is searched ~ 1600 times
- The Thredbo Wikipedia page received 2967 search results in the last 30 days
This is not to discount the value of brands and brand names – they are incredibly important. As is shown, the name ‘Thredbo’ has been built up over many years and is a highly recognised and actively searched term online.
From the marketer’s perspective, the term ‘Thredbo’ is important. Thredbo Alpine Resort has invested heavily and benefitted enormously from the now-famous brand they have built.
All this branding was negated because the Federal Court looked at Google screenshots of searches for ‘Thredbo’, and ‘Thredbo reservations’ that showed a variety of links to traders which ‘proved’ that the word Thredbo was not distinctive to the Thredbo Alpine Village business, and that the website disclaimer was effective.
- So what are the implications for the destination or travel marketer?
- Obtain appropriate legal advice to make sure your trading name and trade marks are effectively protected
- Secure any protections available as early as possible in your marketing efforts
- Just using the name and even owning a trade mark may not be sufficient to protect your brand
- Your appearance in search results and that of your competitors can and will be relied upon as evidence to support or negate your brand claim
- You must have a fully integrated strategic marketing plan incorporating a comprehensive digital strategy
- The digital strategy must include more than just your website. It must include:
- an active domain name strategy utilising multiple domains
- search engine optimisation
- search engine marketing
- social media strategy
- effective monitoring, measurement and management to detect emerging issues early
- In summary, from the marketer’s perspective it appears that Thredbo Alpine Village relied too heavily on their reputation and failed to properly assess the risks to brand protection in today’s digital economy.
