Federal Court effectively gives monopoly to composite mark made up of descriptive words

REA Group Ltd v Real Estate 1 Ltd ([2013] FCA 559) concerned an action for misleading and deceptive conduct, passing off and trademark infringement against Real Estate 1 Ltd for its use of the domain names 'realestate1.com.au' and 'realcommercial1.com.au' in relation to the provision of an online property portal. 

REA Group Ltd operates a property portal business which commenced operation in 1998 with the provision of a residential property portal, 'realestate.com.au', through which real estate agents in Australia listed residential properties online. In 2002 REA added a commercial property portal to its portfolio, 'realcommercial.com.au', which purely promoted commercial listings. By 2011, 95% of Australian real estate agents listed properties through these portals.

REA is also the registered owner of Australian trademarks for the phrases 'realestate.com.au' and 'realcommerial.com.au' (both for composite marks), registered in respect of services in Classes including 35 and 36 of the Nice Classification. The main brand elements of the 'realeastate.com.au' and 'realcommercial.com.au' logos appear below:

Real Estate 1 Ltd also operates a property portal business which, in 2008, launched two online property portals for listings of residential properties and commercial properties with the domain names 'realestate1.net.au' and 'commercial1.net.au', respectively. The logos for these portals were registered as trademarks by Mr Luff, a director of each of the corporate respondents, and his wife in 2007, including in respect of services in Classes 36 and 42. The logos appear below:

In 2008 Mr Luff acquired the domain name 'realestate1.com.au'. In March 2009 Real Estate 1 rebranded its residential property portal as 'realestate1.com.au'. The 'Real Estate 1' logo was changed to:

From around August 2009, Real Estate 1's commercial property portal was conducted at 'realcommercial1.com.au' and was rebranded as:

REA claimed that Real Estate 1's use of the domain names 'realestate1.com.au' and 'realcommercial1.com.au' and the corresponding trademarks represented that its business and websites were in some way associated with, authorised or approved by REA.

The Federal Court noted that an assessment of whether conduct is misleading or deceptive, or likely to be so, necessitates the identification of the relevant ‘impugned conduct’, which it deemed to be Real Estate 1's use of either 'realestate1.com.au' or 'realcommercial1.com.au' displayed in search results (whether organic or paid) resulting from consumers entering various keywords into a search engine.

Whilst Justice Bromberg held that REA's 'realestate.com.au' and 'realcommercial.com.au' names had acquired a secondary meaning, his Honour noted that, in circumstances where a business's trade name comprises ordinary descriptive words, a rival business need only use a slightly different name for it to be immune from liability. There were many domain names registered by other parties which contained the words 'real estate'.  Therefore, the '1' in 'realestate1.com.au' sufficiently differentiated Real Estate 1’s domain name from REA's 'realestate.com.au' domain name. However, as 'realcommercial' was a "concocted" name, rather than a name comprised only of ordinary descriptive terms, the addition of the '1' was not sufficient to distinguish Real Estate 1's commercial property portal name. Despite this conclusion, the court held that there had been no misleading or deceptive conduct resulting from the use of the 'realcommercial1.com.au' domain name, as any likely confusion would only be momentary and would be immediately dispelled when consumers visit Real Estate 1's commercial property portal.

The court further concluded that there was no misleading or deceptive conduct in relation to the use of the 'realestate1.com.au' logo on the basis that, even if consumers had visited Real Estate 1's sites, the small difference in names was sufficient to prevent consumers from being deceived and any diversion to the 'realestate1.com.au' website could reasonably have arisen as a result of REA’s fault in adopting an insufficiently distinctive name. 

REA also claimed that Real Estate 1's use of the term 'realestate1' combined with '.com.au' and its the use of 'realcommercial1' and 'realcommercial1.com.au' infringed its registered trademarks on the basis that Real Estate 1's logos and URLs were deceptively similar to REA's marks (Section 120(1) of the Trademarks Act 1995 (Cth)). Justice Bromberg noted that there was a lower threshold for proving trademark infringement than that for misleading and deceptive conduct.

His Honour held that the Real Estate 1 logo did not sufficiently resemble REA's logo to be deceptively similar and that there was no real tangible danger that a person who knew REA's trademarks would have been confused. However, because the essential feature of REA's 'realcommercial.com.au' trademark is 'realcommercial', being a concocted (rather than descriptive) phrase, Real Estate 1's use of 'realcommercial' gave rise to a real danger of consumer deception or confusion created by the common feature in each logo. 

In relation to Real Estate 1's use of 'realestate1.com.au' on its website, his Honour found that one of the central distinguishing features of REA's 'realestate.com.au' mark was that, in that context, the term 'realestate.com.au' was both a brand name and a trading name. By using 'realestate1.com.au' as a heading in sponsored links and in a URL, Real Estate 1 took up the same idea as REA and, unlike in the context of the misleading and deceptive conduct claims, 'com.au' took on a function of identifying the brand whose domain name was also being used as a brand. Therefore, there was a real danger of confusion on the part of a consumer who was familiar with the 'realestate.com.au' trademark and who merely scanned the search results page; that is, that they would miss the extra '1' in 'realestate1.com.au'. This draws out the difference in degree between the "likely to mislead or deceive" test under the Australian Consumer Law and the "likely to deceive or cause confusion" test for trademark infringement.

Surprisingly, Real Estate 1 did not challenge the validity of REA's registration on the ground that it was not distinctive. The conclusion reached by Justice Bromberg that Real Estate 1'suse of 'realestate1.com.au' as a brand on its website infringed REA's trademarks was not without hesitation. His Honour held (at 247) that:

"registration of REA’s 'realestate.com.au' marks has effectively given REA a monopoly over two highly descriptive terms when used in combination. Those terms are likely to be the most common terms on a search results page where a search has been conducted for a residential real estate portal. The protection conferred by REA’s trademarks over the use of 'realestate' and '.com.au' in combination, provides REA with a monopoly over the term 'realestate' in circumstances where its rivals seeking also to use 'realestate' or a close variant thereof as a second-level domain, do not forego the advantages of using '.com.au' in their domain names... It is troubling that terms that are highly descriptive of a particular area of commerce and which provide significant commercial advantage should not be readily available for use by all who seek to participate in that commerce. However, in the absence of a successful challenge to the registration of REA’s 'realestate.com.au' trademarks, whilst that may be troubling, REA is nevertheless entitled to the protection of the monopoly which has been conferred upon it."

In the light of that statement, Justice Bromberg has effectively given a monopoly to a composite mark made up of descriptive words and a domain name descriptor. Whether or not his Honour's comments will prompt Real Estate 1 to challenge REA's trademarks remains to be seen. The time for appeal expires on June 28 2013 and the website at the domain name 'realestate1.com.au' is still active.

Jessica Sapountsis and Des Ryan, Davies Collison Cave Law, Melbourne