In the words of Justice Bromberg in REA Group Ltd v Real Estate 1 Ltd  FCA 559, “scouring the real estate classifieds of a metropolitan daily newspaper used to be an essential Saturday morning activity for those interested in buying or renting real estate”. That activity changed with the arrival of online property portals such as realestate.com.au and domain.com.au in the late 1990s …and then got slightly trickier with the recent arrival of “realestate1.com.au”.
REA operates the leading online real estate portals “realestate.com.au” and “realcommercial.com.au”. It took action against Real Estate 1, the operator of the domain names “realestate1.com.au” and “realcommercial1.com.au”, claiming that Real Estate 1 had:
- Engaged in misleading or deceptive conduct in contravention of the former Trade Practices Act (now the Australian Consumer Law);
- Engaged in conduct amounting to passing off at common law; and
- Infringed REA’s registered composite trade marks.
KWM represented REA in the litigation. Justice Bromberg found that Real Estate 1 infringed REA’s registered composite trade marks, that the brand name “realestate.com.au” had acquired secondary meaning and that it had become distinctive of REA’s property portal business. That said, although the trade mark infringement claim succeeded, the misleading or deceptive conduct/passing off claim did not.
Trade Mark Infringement
REA owns registered composite trademarks comprising the words “realestate.com.au” and “realcommercial.com.au”, together with logos. REA alleged that Real Estate 1 had infringed those marks by using domain names (both in search engine results and web browsers) and stylised logos which were deceptively similar to REA’s marks.
In relation to REA’s realestate.com.au composite trade mark:
- Bromberg J found that the “essential” or “distinguishing” feature of the mark was the word element, being the domain name “realestate.com.au” in its entirety. The logo element performed a secondary function.
- This was based on evidence of the high degree of consumer recognition of the realestate.com.au brand, and also expert evidence.
- Therefore, the domain names used by Real Estate 1 were deceptively similar to REA’s composite trade mark. However, His Honour found that the realestate1.com.au logo did not infringe REA’s mark because its presentation was different to REA’s mark in font, colour, features, and the placement of the word element in contrast to the other components of the mark (“realestate1” was emphasised as against the “.com.au” element).
In relation to REA’s realcommercial.com.au mark, Bromberg J found that:
- The domain name “realcommercial1.com.au” and the corresponding stylised logo were infringing;
- The strongest element of REA’s mark was “realcommercial”; and
- Because all of Real Estate 1’s uses similarly emphasised “realcommercial” without sufficient differentiation to REA’s mark, the marks used were held to be deceptively similar.
Misleading or deceptive conduct & passing off
The focus of REA’s consumer law/passing off case was on Real Estate 1’s use of the domain name “realestate1.com.au” as it appeared in the URL component of an internet search engine result. The search engine results page was the doorway from which traffic intending to go to the realestate.com.au website could be diverted to the realestate1.com.au website.
REA established that the term “realestate.com.au” had acquired a secondary meaning, such that the name had come to distinguish REA’s property portal from other portals in the same market. REA also established that Real Estate 1 had a deliberate strategy to take advantage of REA’s reputation (in the hope that REA would make an offer to purchase the Real Estate 1 business).
So, if Real Estate 1’s strategy was to trade off REA’s established reputation, why did the Court dismiss the claims for misleading or deceptive conduct and passing off?
- First, Bromberg J took the view that Real Estate 1’s strategy did not necessarily amount to an intention to mislead or deceive consumers, even though “less than honourable” motives were found to exist. Instead, the intention was categorised as a naïve business strategy, formulated with little awareness of the relevant market.
- Secondly, Justice Bromberg relied heavily on the Hornsby Building case* and held that only small differences in a descriptive brand name – for example, the addition of the number ‘1’ – will usually be enough to allay consumer confusion. This finding was dependent on assumptions about the level of scrutiny used by consumers when using Internet search engines.
- Thirdly, although consumer confusion was theoretically possible due to the similarity in the domain names, his Honour considered that misleading or deceptive conduct was not likely to occur in fact. This was because organic search results for Real Estate 1’s websites appeared much later than REA’s in response to a search for “realestate.com.au”, and it was unlikely that a consumer who clicked on an organic search result for realestate1.com.au on the fifth page of a Google search result had done so in error.
- Finally, Justice Bromberg found that any consumer confusion that had or was likely to occur was commercially insignificant to REA. In his Honour’s view, a consumer would immediately recognise his or her error if they arrived at the realestate1.com.au website after having intended to visit realestate.com.au.
The Court is yet to make final orders giving effect to Justice Bromberg’s reasons for judgment.
* Hornsby v Building Information Centre Pty v Sydney Building Information Centre Ltd (1978) 140 CLR 216