In rejecting the assertions of the operator of the Thredbo resort that the name ‘Thredbo’ had acquired a secondary meaning which that operator had the exclusive right to use, the Federal Court confirmed that it is very difficult to establish a secondary meaning of a geographical place name (particularly a well known one). The Court also found that a clause in a sublease granted by the operators of the Thredbo resort preventing the sublessee from using ‘Thredbo’ in its business activities operated as a restraint of trade which, with no limits on geography or business type, was unreasonable and excessive, and therefore invalid. Contracting parties seeking to restrain a counterparty must consider carefully the extent of any restraint to ensure that it does not go further than is necessary to protect the beneficiaries of it.
Kosciuszko Thredbo Pty Ltd and Thredbo Resort Centre Pty Ltd (KT) (which operate a tourist report and village in the Kosciuszko National Park) brought claims against ThredboNet Marketing Pty Limited (ThredboNet) (which conducts an online business of managing and leasing of rental accommodation in Thredbo) in relation to marketing activities by ThredboNet.
Cowdroy J found that:
- It has long been accepted that it will be very difficult to claim exclusivity in respect of a geographic name. Despite KT having extensively used the word “Thredbo” in marketing materials, intellectual property and infrastructure and having spent millions of dollars developing the resort, there was no evidence to suggest that ‘Thredbo’ had acquired a secondary meaning or reputation which KT had the exclusive right to use;
- Neither ThredboNet’s use of the word ‘Thredbo’ in its domain names nor its use of similar colours, font and slogan (‘This is our Thredbo’ as opposed to KT’s ‘My Thredbo’) in its websites constituted misleading or deceptive conduct or false or misleading representations by ThredboNet under section 18, 29(1)(g) or 29(10(h) of Schedule 2 to the Competition and Consumer Act 2010 (Cth);
- The fact that 50,000 people had ‘liked’ KT’s Facebook page (compared to only 200 for ThredboNet’s) suggested that consumers would not form the view that ThredboNet’s Facebook page was associated with KT’s Facebook page (despite similarities in the pages); and
- In this case, there were no practical differences between KT’s claims for passing off and its claims for misleading and deceptive conduct.
However, Cowdroy J found that ThredboNet had engaged in misleading and deceptive conduct and made false and misleading representations by incorporating the phrase ‘My Thredbo’ into its online reservation system. His Honour was particularly persuaded by the fact that a ‘My Thredbo’ Google search returned ThredboNet’s booking page as one of the first results and the features that differentiated ThredboNet’s websites from those of KT were not apparent from the Google search results.
Cowdroy J also found that a clause in a sublease granted by KT which prohibited ThredboNet from using the word ‘Thredbo’ “in connection with its business activities” operated as a restraint of trade. Further, the fact that the clause was not limited by geography or business type meant that it went further than was necessary to protect KT and was thus unreasonable and excessive. It gave KT a default monopoly on the use of ‘Thredbo’ in business, depriving ThredboNet of its common right, to make honest use of words forming part of the common heritage. As the clause could not be read down, the restraint was invalid and must be severed from the sublease.
See the case.