In brief

  • Solar panels and solar hot water heaters are ‘goods of the same description’ for the purposes of section 120(2)(a) of the Trade Marks Act 1995 (Cth) (Trade Marks Act).
  • SOLAHART and SOLARHUT are deceptively similar trade marks. 
  • A party may be infringing another’s trade mark by retaining an infringing domain name which redirects to a non-infringing domain name (and a non-infringing website). However, it must be shown that the intention behind this action was to capitalise on the goodwill of the infringing mark by increasing web traffic to the non-infringing website.

Introduction

This update summarises the Federal Court’s decision in Solahart Industries Pty Ltd v Solar Shop Pty Ltd [2011] FCA 700. For brevity’s sake, matters of peripheral relevance (including a secondary action brought by Rheem Australia Pty Ltd) are omitted.

The facts

Solahart has been manufacturing SOLAHART-branded solar hot water heaters since 1953. It has several Australian trade mark registrations covering SOLAHART in class 11.

Solar Hut is a web-based vendor of solar panels, established in May 2009. From 1 May to 6 October 2009 (first period), it sold solar panels through its website (solarhut.com.au) under the brand SOLARHUT.

Solahart objected to Solar Hut’s conduct, and on 6 October 2009 Solar Hut agreed to abandon the SOLARHUT brand in favour of the name SUNSAVERS. Solar Hut created a new website with the domain name sunsavers.com.au.

However, it did not completely abandon its SOLARHUT brand. In fact, it kept the solarhut.com.au domain name alive for an additional year (second period) following the brand change. That domain routed to the SUNSAVERS website. That is, both solarhut.com.au and sunsavers.com.au remained actively linked to the SUNSAVERS website.

Solahart sued Solar Hut for trade mark infringement, passing off and misleading and deceptive conduct.

The court’s findings on trade mark infringement

Perram J found that the only available basis for a claim in infringement was under section 120(2)(a) of the Trade Marks Act. Under that section, infringement would be open if Solar Hut’s solar panels were goods ‘of the same description’ as Solahart’s registered goods, if the marks were substantially identical or deceptively similar, and if Solar Hut was using SOLARHUT as a trade mark.

Similarity of goods

Solahart’s registered goods (solar hot water heaters) were in many respects similar to solar panels. Both utilised solar power. Both reduced domestic electricity usage. Both involved roof-mounted solar collectors. Similar motives could explain the decision to purchase each. There was likely to be a degree of competition between the products.

On the other hand, there were clear points of difference. Solar panels generate electricity whereas solar hot water heaters are heat transfer devices. The goods are sold through different means and are installed by tradespersons (plumbers vs electricians). Their purposes also differ: solar hot water heaters are designed to heat water whereas solar panels are intended to generate electricity.

Ultimately, however, there was sufficient degree of substitutability between solar panels and solar hot water heaters, and between the classes of consumers to which the goods were sold. Two of Solahart’s trade mark registrations left open a claim in infringement.

Similarity of marks and trade mark use

The balance of Perram J’s judgment on infringement was structured according to the three allegedly infringing acts:

  • Solar Hut’s sale of solar panels during the first period
  • Solar Hut’s use of the solarhut.com.au domain name during the first period, and
  • Solar Hut’s continued use of the solarhut.com.au domain name during the second period.  

Sale of SOLARHUT solar panels during the first period

SOLAHART and SOLARHUT were not substantially identical. However, Perram J described the aural differences between them as ‘imperceptible’. Together with the strong visual and conceptual resemblances between the marks, there was no difficulty in finding that SOLAHART and SOLARHUT were deceptively similar.

SOLARHUT was being used as a trade mark on the Solar Hut website and in radio, television and print advertisements.

Therefore, Solar Hut had infringed Solahart’s registrations by selling its solar panels on its website during the first period.

Use of solarhut.com.au domain name during the first period

Putting the ‘www’ prefix and the ‘.com.au’ suffix to one side (which, Perram J explained, was what consumers did anyway), the marks were clearly deceptively similar.

Further, the solarhut.com.au domain name was being used as a trade mark. Solar Hut marketed its goods (offline) under the SOLARHUT brand and invited consumers to visit its website. At that website, consumers could purchase SOLARHUT goods. Plainly, the domain name was being used as a trade mark.

So, Solahart’s trade marks were also infringed by Solar Hut’s use of the domain name solarhut.com.au during the first period.

Use of solarhut.com.au domain name during the second period The issue here was whether the domain name was being used as a trade mark during the second period, once Solar Hut had agreed to abandon the SOLARHUT brand in favour of SUNSAVERS. The answer: yes.

Although Solar Hut was now selling its goods through the sunsavers.com.au website, it deliberately kept the solarhut.com.au domain name alive as a second gateway to the SUNSAVERS website.

In Perram J’s words, ‘solarhut.com.au and sunsavers.com.au were merely two different doors on to the same webpage.’ The purpose of this manoeuvre was to increase web traffic to the SUNSAVERS website. Solar Hut deliberately exploited the goodwill in the SOLARHUT mark for as long as possible in order to reap the benefits of increased web traffic.

Passing off and misleading or deceptive conduct

Solahart would establish a cause of action in passing off if it could show that it had a reputation in SOLAHART, that Solar Hut’s radio commercial contained a misrepresentation, and that Solahart had suffered loss. Solahart established a sufficient reputation in SOLAHART. The aural similarity between SOLAHART and SOLARHUT as used in the radio commercials gave rise to a misrepresentation.

However, there was no loss. Perram J found that, given Solahart’s reputation amongst Australian consumers, any confusion engendered by the radio commercials could only have confused listeners into believing that the advertisement was for SOLAHART goods. In His Honour’s words, ‘the confusion engendered by the radio commercial is so complete that it could only have worked to Solahart’s advantage.’ With no loss being evidenced, the passing off claim was doomed.

Solahart’s complaint of misleading or deceptive conduct was dismissed on the basis that the radio commercial ‘could not have resulted in loss to Solahart.’

Commentary

In summary, Solar Hut infringed Solahart’s trade mark registrations by selling SOLARHUT-branded goods, by using the solarhut.com.au domain name to market those goods, and by maintaining that infringing domain as the gateway to its rebranded website.

Solahart’s passing off and TPA claims were dismissed on the basis that no loss could be shown.

Perram J’s conceptualisation of damage in passing off is open to question. It was Solahart’s reputation and goodwill that formed the basis for his Honour’s conclusion that any confusion caused by the radio commercial could only work in Solahart’s favour. And yet his Honour did not address an alternate possibility: a consumer familiar with Solahart who, enticed to visit the solarhut.com.au website upon hearing the radio commercial, was mistaken into thinking that Solahart had abandoned solar hot water heaters in favour of solar panels, and as a result, seeking to purchase a solar hot water heater elsewhere.

Other difficulties beset his Honour’s remarks analysis of section 52 TPA. Loss is not an element of that cause of action; its relevance goes only to recovery of damages. Injunctive relief is routinely granted for breaches of section 52 TPA (and its ACL equivalent) where no damage (or threat of damage) can be shown.

Given that Solahart was victorious in its infringement claim, and given that no damage was in fact evidenced, there would be little point in Solahart appealing the judgment on principle.

Take-home points

Perram J’s decision is useful because it establishes that an infringing domain name can be ‘used as a trade mark’ where it redirects to a non-infringing domain name, where it can be shown that the purpose of the manoeuvre is to capitalise on the goodwill of the infringing mark.