Kosciuszko Thredbo Pty Limited and Thredbo Resort Centre Pty Ltd v ThredboNet Marketing Pty Limited  FCAFC 87
Online accommodation booking business ThredboNet Marketing Pty Ltd (ThredboNet) offers accommodation at the Thredbo village skiing resort, and uses the name "Thredbo" prominently in its domain names, websites and Facebook page.
Kosciuszko Thredbo Pty Ltd and Thredbo Resort Centre Pty Ltd, the operators of the Thredbo skiing resort (together, Thredbo Operator) took action against ThredboNet and its director, alleging that ThredboNet's use of "Thredbo" in association with its online booking services constituted passing off, misleading and deceptive conduct in contravention of the Australian Consumer Law and a breach of contract.
In a unanimous judgment, the Full Federal Court dismissed the appeal and upheld the trial judge's decision, rejecting Thredbo Operator's claims to rights in the name "Thredbo".
The decision indicates that where a brand name is a geographic location or otherwise descriptive, it is very difficult to establish monopoly rights in the name.
The case is also noteworthy because it provides useful guidance about when domain names, websites and Facebook pages do not constitute misleading and deceptive conduct in breach of the Australian Consumer Law, or passing off.
History of Thredbo, and why Thredbo Operator claimed rights in the word "Thredbo"
Somewhat unusual circumstances led to Thredbo Operator claiming rights in the geographic name "Thredbo" in this case. The now well known Thredbo village ski resort in New South Wales was first established and named in the 1950's (by Thredbo Operator's predecessors). However, Thredbo itself is a geographic area, and has been for over a century. Thredbo Operator controls and operates much of the Thredbo resort business, including the ski lifts, ski school, hotels, accommodation, and provides utilities like roads, water and waste supplies. Other businesses operate in Thredbo, but under sub-leases from Thredbo Operator.
Claims made by Thredbo Operator over use of the “Thredbo” trade mark
- because of its unusual origin, "Thredbo" was not a genuine geographic name;
- extensive advertising since 1987 had created and reinforced the perception that Thredbo Operator's business was synonymous with the name "Thredbo";
- the lease arrangements gave Thredbo Operator a unique level of control over the resort;
- "Thredbo" was synonymous with the resort and would not exist but for Thredbo Operator;
- "Thredbo" has a secondary meaning associating it with Thredbo Operator's businesses, akin to the word "Disneyland". Like Disneyland, Thredbo is more than a place, it is a complete branded entity;
- through its website domain name www.thredbo.com.au, "thredbo.com.au" was a brand in its own right.
The dispute with online accommodation provider ‘ThredboNet’
As part of its operations, Thredbo Operator sub-leases accommodation in Thredbo to ThredboNet. ThredboNet runs its online Thredbo accommodation booking service via websites including www.thredboreservations.com.au, www.thredbo.com and a Facebook page.
Thredbo Operator obtained evidence that people had been confused between Thredbo Operator's accommodation services and ThredboNet's accommodation services, and Thredbo Operator had received complaints (for example, about double-bookings) and communications from people who had dealt with, or intended to communicate with, ThredboNet.
During the trial, ThredboNet gave an undertaking to include on its websites (but not its Facebook page) a disclaimer which stated that its business is not associated with Thredbo Operator. However, Thredbo Operator asserted that the disclaimer was not effective because it was "buried in the middle of a mass of other text" on the websites.
How "misleading and deceptive conduct" was assessed by the Full Federal Court
The Full Federal Court confirmed that in order to establish a secondary meaning in a word sufficient to support a claim for misleading conduct or passing off, it was not necessary for an applicant to prove it has a exclusive right to use that word.
The Full Federal Court considered whether ordinary or reasonable members of the class of consumers or prospective purchasers of Thredbo accommodation services would, or would be likely to, understand that ThredboNet's activities, in particular its uses of the word "Thredbo", (mistakenly) conveyed to them that they were dealing with Thredbo Operator. In deciding this in favour of ThredboNet, the Full Federal Court recognised that:
Ordinarily, a trader is entitled to use a geographic name honestly and accurately unless that name has become distinctive of another's goods or services and the trader is using the name to pass off its good or services as those of the other."
ThedboNet website disclaimers on website and number of Facebook page "likes" proved relevant
The Court decided that a reasonable consumer would not mistakenly think that they were dealing with Thredbo Operator if they accessed ThredboNet's sites. The disclaimers on ThredboNet's websites were very relevant to the Full Federal Court's decision. Interestingly, the Court recognised that a consumer, when doing an internet search, might easily be led to ThredboNet's websites thinking that the domain names www.thredboreservations.com.au and www.thredbo.com were Thredbo Operator's official sites. However, the Court considered that:
- consumers frequently click on website links only to find that the link does not go to the site of the supplier or business they wanted; and
- in this case, a reasonable consumer would have seen the disclaimer on ThredboNet's websites that the site was not associated with Thredbo Operator.
It was also relevant that:
- mere confusion in the mind of a consumer does not equate to misleading or deceptive conduct;
- other traders were using "Thredbo" in relation to business activities in Thredbo, including accommodation businesses;
- ThredboNet's online sites looked different to Thredbo Operator's sites;
- accommodation at Thredbo was expensive, so a reasonable consumer would be careful when selecting an accommodation provider, the accommodation and its price; and
- ThredboNet's Facebook page had only 106 "likes", compared to over 40,000 "likes" for Thredbo Operator's Facebook page. Here, Thredbo Operator's own popularity on social media counted against its argument that consumers were misled by ThredboNet's page.
Breach of contract and "restraint of trade" clause claim failed
A clause in ThredboNet's sub-lease barred it from using, without Thredbo Operator's consent, the word "Thredbo" in connection with any business it carried out. Thredbo Operator sued ThredboNet for breach of that contractual clause, but failed on that claim too.
The Full Court confirmed the test for ascertaining the meaning of the terms of a commercial contract is what a reasonable business man in the position of the parties would have understood the terms to mean and that this is ascertained by considering the actual language used, the surrounding circumstances known to the parties and the purpose or object secured by the contract.
The Full Court rejected Thredbo Operator's (literal) interpretation of the clause, on the basis that it would be commercially nonsensical to read the sub-lease as prohibiting ThredboNet using the word "Thredbo" when advertising accommodation at the sub-leased premises, given the sub-leased premises were located in Thredbo.
The Full Court considered the clause was unreasonable and agreed with the trial judge's conclusion that the clause was void.
Three key learnings for online businesses in relation to trade marks
- "Disclaimers" are important. If the operator of a website clearly identifies itself and disavows any affiliation with any similar businesses, it might be difficult to establish that such a website is improperly trading off the reputation of any similar business, in contravention of the Australian Consumer Law or passing off and more particularly if the goods or services in question are quite expensive.
- Contractual clauses intending/purporting to impose restrictions on the rights of a person need to be carefully drafted. When a provision is challenged as an unreasonable restraint of trade, it will be difficult to go behind the literal meaning of the words used in order to defend the provision and even more so by reference to an alleged accepted or common practice, when there is no evidence to support the position.
- Registered trade marks can be a useful right. Thredbo Operator's case against ThredboNet was based on its common law, or unregistered, intellectual property rights (as well as breach of contract). Depending on the circumstances, Thredbo Operator's case against ThredboNet might have been improved if it had obtained a registered trade mark and was in a position to allege that ThredboNet had infringed that registered mark. However, an astute trade mark prosecution strategy would likely be required for there to be a chance of Thredbo Operator obtaining (valid) registration of a trade mark prominently featuring the geographic name "Thredbo".