Scintilla – a flash, a spark, an iota. Shorthand for creativity and an indicator of inventiveness under Australian law.






Wednesday, September 3, 2014

Location, location, location: the dangers of geographical names

By James Gonczi, Lawyer

The Full Federal Court recently handed down its decision in Kosciuszko Thredbo Pty Limited v ThredboNet Marketing Pty Limited.

Kosciuszko Thredbo Pty Limited (KT, the appellant) has operated the very popular Thredbo Village and Thredbo Resort since the 1980s. In that time the appellant has spent in excess of $150 million on projects around the village and resort. 

Unless you're a snow aficionado or serious Thredbo regular, you may well be unaware that KT holds a lease over essentially everything in Thredbo (that's the geographical area of Thredbo, including most of the accommodation, bars, restaurants and chair lifts). ThredboNet Marketing Pty Limited (TN, the respondent) is a sub-lessee, which manages rental properties in Thredbo using the domain name www.thredbo.com. The appellant took legal action in an effort to prevent the respondent from using the name 'Thredbo' in its domain name.

In the first instance proceedings before Justice Cowdroy, KT argued that by using 'Thredbo' to advertise accommodation through its website and Facebook page, TN had engaged in misleading and deceptive conduct and passing off, and had also breached various sublease agreements between the parties. 

The crux of the appellant's argument was that consumers associate the word 'Thredbo' with KT's business and that 'Thredbo' had taken on a secondary, non-geographical meaning as a result of its extensive use and promotion of the name.

Justice Cowdroy disagreed with KT. His Honour found that KT had not proved that there was a secondary meaning in 'Thredbo' such that KT had acquired an exclusive right to use it. His Honour also found that TN's use of 'Thredbo' on its website and Facebook page was not misleading or deceptive.


The appeal


The relevant issues on appeal were whether:

a) the primary Judge was wrong to conclude that KT had not established a second meaning in 'Thredbo'; and

b) the respondent's conduct was misleading and deceptive.


Secondary meaning


The appellant argued that the primary judge had been wrong to ask whether KT had acquired an 'exclusive right' to use 'Thredbo'. The 'exclusive right' question, they argued, was the applicable test in a trade mark context, but not in a case for misleading and deceptive conduct or passing off. KT argued that the relevant question was whether it was likely that ordinary and reasonable members of the public would be misled into thinking that they were dealing with the appellant when in fact they were dealing with the respondent.

The Full Court agreed with the appellant on this point. The Full Court noted that the Full Court in Cadbury Schweppes 159 FCR at 418 had held that the principles related to passing off do not require an exclusive reputation in relation to a particular characteristic (in that case, purple). So it is possible for conduct to be misleading or deceptive even in circumstances where the applicant does not have an exclusive reputation in the characteristic in issue.

The big issue for the Full Court was whether it could be demonstrated that TN's use of 'Thredbo' could lead consumers to believe that there was some relevant connection between the respective services of the two parties, other than that both services related to the Thredbo region.

Misleading and deceptive conduct


The Full Court summarised the appellant's case as being that: 'they were identified as "Thredbo" in the public mind and that substantively any use of that word in relation to activities or businesses that were, or could be, conducted at that place would be associated with them.'

The Full Court rejected this assertion and held that the respondent's conduct was neither misleading nor an attempt to pass off its services as being associated with the appellant's services. Their Honours concluded that the respondent's website did not look like the appellant's and that many other traders used the word Thredbo as a geographical name in a manner consistent with honest and legitimate trading. The court also noted that a trader will ordinarily be entitled to use a geographical name so long as they do so honestly and without looking to pass off on another's reputation.

The court said that the frequent use of 'Thredbo' by other traders negated the appellant's suggestion that 'Thredbo' had taken on a secondary meaning that would render the respondent's use of 'Thredbo' misleading or deceptive (or likely to mislead or deceive). In coming to this conclusion the court attributed a degree of prudence to the 'ordinary reasonable consumer' looking for holiday accommodation.


Conclusion


A straw poll of our office suggests that the court's conclusion was not surprising. Only the most avid skier from a group of over a dozen lawyers thought of Thredbo as a resort, rather than a geographical area and no one in the team thought that TN's website resembled KT's. The Full Court's decision highlights the potential dangers for companies that rely on geographical names as part of their branding. This decision adds to the already substantial number of cases, such as Clark Equipment Co v Registrar of Trade Marks (1964) 111 CLR 511 (where MICHIGAN was found not to be registrable) and Blount Inc v Registrar of Trade Marks (1998) 83 FCR 5 (where OREGON was found not to be inherently adapted to distinguish, though the mark was registered on the basis of s41(6) of the Trade Marks Act 1995 (Cth), which is no longer in force), that have dealt with the issue of geographical names from a trade marks perspective.

No comments:

Post a Comment