When considering Australian trade mark law in the context of the internet, no special principles apply.  A challenge to use of key words, search engine optimisation (or even registration and use of domain names) relies on established causes of action such as infringement of a registered trade mark, passing off or statutory misleading and deceptive conduct.

A recent Federal Court case which involved these recognised causes of action in the context of search engine optimisation is the Full Court decision of Lift Shop Pty Ltd v Easy Living Home Elevators Pty Ltd [2014] FCAFC 75.

Trade mark use and online marketing (Lift Shop case)

  • The Lift Shop case does not represent a shift in Australian trade mark law/unlawful passing off, rather, it is merely an application of orthodox principles in the context of “search engine optimisation”.
  • In the internet environment, the position in Australia is that use by an advertiser of a third party competitor trade mark owner’s mark as a key word to improve the advertiser’s rankings in search engine results (search engine optimisation), is not enough, without more, to constitute use “as a trade mark” or unlawful passing off under Australian law. There is no trade mark use as the keyword is not used by the advertiser as a “badge of origin” for the advertiser’s goods or services.
  • Commercial organisations should consider key word advertising in search engine practices in light of their appetite for risk and the commercial market in which they operate.

Recap

It is convenient to briefly recap the general principles under Australian trade mark law in the context of the internet:

  • Trade mark “use” only occurs when a trade mark is used as a “badge of origin” ie to distinguish goods and services provided in the course of trade from those other traders (E&J Gallo Winery v Lion Nathan Australia Pty Limited [2010] HCA15; Trade Marks Act 1995 (section 120)). This concept is embodied in the statutory definition of a trade mark (Trade Marks Act 1995 (section 17)).
  • There is no Australian decision concluding that use by an advertiser of a third party competitor trade mark owner’s mark as a keyword for sponsored advertisements (or in metatags) is sufficient to constitute use “as a trade mark” or unlawful passing off. The issue was discussed in the Victorian Supreme Court decision of Mantra Group Pty Ltd v Tailly Pty Ltd (No 2) (2010) 86 IPR 19 (Reeves J), without being determined.
  • The Mantra case related to the use of websites, offering services competing with the trade mark owner’s services, at domain names similar to the trade mark owner’s marks. The court found, applying orthodox principles, that use of the domain names for the websites amounted to trade mark use and, hence, infringement rather than, as claimed by the defendant, use that merely described the location and the range of services offered.
  • International examples are of less relevance in the Australian context for the purposes of considering trade mark infringement under Australian law, as a different legal system and set of principles apply. Australia lacks a true dilution law when compared to the “anti- dilution” provisions in legislation enacted in the United States and EU.

Trade marks and search engine optimisation: no trade mark infringement or unlawful passing off established (Lift Shop case)

On 20 June 2014, the Full Court confirmed it was not trade mark infringement to use words of a composite trade mark (LIFTSHOP) in the title of a web page in search results: Lift Shop Pty Ltd v Easy Living Home Elevators Pty Ltd [2014] FCAFC 75 (Besanko, Yates and Mortimer JJ). The Full Court did not address questions of statutory misleading conduct or passing off, as those matters were not challenged on appeal (the trial judge had found that there was no misleading representation to consumers in using the word “lift shop” in its search engine results: Lift Shop Pty Ltd v Easy Living Home Elevators Pty Ltd [2013] FCA 900, Buchanan J).

Background

On 20 November 2012, Lift Shop Pty Ltd commenced proceedings in the Federal Court against its close rival in the home elevator/lift market, Easy Living Home Elevators Pty Ltd. The mark LIFT SHOP (logo) represented below, had been registered in Australia by Lift Shop Pty Ltd since 11 September 2007 in respect of goods in class 7 (elevators (lifts)):

Click here to view image.

Lift Shop and Easy Living both supplied customised elevators/lifts and disability platform elevators in Australia, at similar price points and products of a comparable standard (sourced from China and Europe respectively). Although both companies competed across Australia, most of their business was in New South Wales.

During 2012, Easy Living took steps to improve its position arising from internet searches by retaining an agency specialising in “search engine optimisation” (which is a form of online marketing designed to improve rankings in search engine results). This led to Easy Living introducing changes in its marketing, which included the addition of the term “Lift Shop” in the title of the website, the term “lift shop” in the content of the home page and nomination of “lift shop” as a key word.

The effect of those changes was that for any search using or including the term “lift shop”, both Lift Shop and Easy Living appeared on page one of search results and their entries were in very close proximity. The “titles”, URLs and descriptions appearing in search results for each company was as follows:

Australia’s No 1 for Luxury Home Elevators | Lift Shop | Multi-Award…

www.liftshop.com.au/

Lift Shop is Australia’s No. 1 multiple award-winning leader in quality, luxury home elevators. Lift Shop is a national supplier of luxury home lifts, residential lifts...

Easy Living Lifts | Home Elevators| Lift Shop – Home Elevators...

www.easy-living.com.au

At Easy Living home elevators website you will find details on all of our lifts and home elevators here, which will help you achieve the easy living you deserve.

When an internet search for “lift shop” was carried out, the evidence also showed that Easy Living and Lift Shop were not the only businesses which appeared in search results. For example:

Lift Shop

www.MonorailElevators.com.au

Stairlift & Homelift Specialist To Suit All Homes. Call Now. Sydney.

Lift Shop Equipment > > Home

www.liftshopequipment.com

Lift Shop Equipment is a equipment repairs service, that services forklifts, farm equipment, construction equipment and any other types of repair. Need a part for...

No passing off or statutory misleading conduct established

Although the trial judge found one commercial objective of Easy Living was to appear in search results which were likely to identify Lift Shop, its conduct did not amount to a misleading representation to consumers of an association between the companies (or an infringement otherwise of Lift Shop’s reputation rights). 

Rather, the trial judge found that “…the respondent sought to obtain business in open competition with the applicant” (at [31]) and the “two sets of information were presented as alternatives, consistent with the idea that the parties were competitors rather than being associated” (at [38]).

In reaching this conclusion, an important factor was that there was a clear differentiation between the entries relating to each party which appeared on any search page. The court noted that the URLs were quite different, as well as the description in the titles, and the URL of each company (www.easy-living. com.au and www.liftshop.com.au) had a close association with its own mark. There was also no reference on the search page itself to suggest any association between the two businesses, and any visit  by a potential consumer to each company’s website would confirm the separate nature of the businesses.

The trial judge also accepted evidence given by Easy Living’s managing director that his view was that Easy Living’s reputation would not be enhanced by any association with Lift Shop where Easy Living portrayed itself as a source of good quality European lifts and elevators while the applicant’s source of supply was China.

These findings were not challenged on appeal.

No trade mark infringement established

The action brought by Lift Shop on trade mark infringement concerned use by Easy Living of “Lift Shop” in the title of its web page as shown by search results. This action failed, as the trial judge found that Easy Living did not use the term “Lift Shop” “…as a mark, much less its own mark….the term was used in a descriptive way to take advantage of the operation of the search engine” (at [43]).

In reaching this conclusion, the trial judge noted that Easy Living did not wish to suggest any association with Lift Shop, and that other businesses had also used the term “lift shop” in their titles (with the Bing search engine using this term to group the lift businesses together).

Applying orthodox principles, the Full Court unanimously agreed that use of the term “lift shop” was used in a descriptive way by Easy Living, and did not amount to trade mark use or infringement.  The Full Court stated:

“…Those searching the internet using the search term “lift shop” would have understood, on seeing the displayed results, and in particular the words “Lift Shop” in the title of the respondent’s web page, that the respondent was using those words to convey that its business was one of supplying “lifts” and “home elevators”. Although the use of the words “Lift Shop” was given some prominence because of their use in the title of the respondent’s web page, neither that fact, nor the positioning of those words within the title, imbued them with the character of a trade mark. The use of the words “Lift Shop” …makes clear that their only functional significance was to describe the character of that business. Their use by the respondent was not to distinguish its business from others. To the contrary, in the larger setting provided by the results pages, the use of those words was to designate, and would have been understood as designating, that the respondent’s business was of the same character as, or at least of a similar character to, other businesses grouped and operating as “lift shops”. Such use is the antithesis of trade mark use. “ (at [46]) (emphasis added)

As there was no trade mark use (and hence no trade mark infringement), it was not necessary to deal with the allegation of deceptive similarity. Assuming however that the term “Lift Shop” had been used as a trade mark, the Full Court agreed with the trial judge’s analysis that the words “Lift Shop” used by Easy Living in the title of its web page would be deceptively similar to the applicant’s registered mark LIFTSHOP.

Lessons

The decision represents an application of orthodox principles, namely that use by an advertiser of a third party competitor trade mark owner’s mark could only amount to trade mark infringement if the advertiser’s conduct involved use of the third party’s mark “as a trade mark”. Further, conduct could only amount to misleading and deceptive conduct in breach of the Australian Consumer Law and passing off, if there was a false or misleading representation to consumers of a sponsorship or affiliation with the owner of the third party mark.

On one view, in substance, search engine optimisation, or conduct such as key word advertising, is analogous with a competitor placing an outdoor billboard advertisement adjacent to  a competitor’s place of business or own billboard. The conduct indicates that an alternative is available to the competitor’s offering. There could be no trade mark infringement, misleading or deceptive conduct or passing off in such an activity, without more, and it appears simply to be healthy competitive conduct.