Owner of registered trademark restrained from using own mark and domain name in NSW

Australia

In CI JI Family Pty Ltd v National Australian Nappies (NAN) Pty Ltd ([2014] FCA 79, February 14 2014), the owner of a registered trademark has been restrained from using its own trademark and domain name in the state of New South Wales. The applicants in the Federal Court of Australia proceedings successfully argued that the respondents' trademark and domain name were misleading consumers in contravention of Section 18 of the Australian Consumer Law (ACL) (Schedule 2 to the Competition and Consumer Act 2010 (Cth)).

Section 18 of the ACL prohibits conduct, in trade or commerce, which is, or is likely, to mislead or deceive. This case is a reminder that the ACL remains important in a trademark infringement context, as ownership of a registered trademark is not a defence to an action for misleading or deceptive conduct under the ACL. 

The applicants and respondents were originally in business together and registered the business name Nappyland in New South Wales. When the partnership dissolved, the second applicant became the registered owner of the business name and continued to carry on business primarily in New South Wales, being the sale of nappies, paper products, disposable gloves and baby wipes. In conducting its business, the applicant used the following unregistered logo:

The respondents conduct business nationally, trading under the company name National Australian Nappies, accompanied by registered Australian trademark No 902900:

They are also the registrant for the domain name 'nappyland.com.au'.   

The main issue for the court was whether the applicants could restrain the respondents from using in New South Wales the name Nappy Land or a variant. The applicants, seeking injunctive relief, alleged passing off, breach of the ACL and breach of an agreement by the respondents not to use the name in New South Wales. Passing off is essentially the common law corollary to the statutory provision of the ACL. The fundamental position in passing off is that a person cannot represent that its goods or services are those of another person. This article does not discuss the alleged breach of agreement, which was anyhow rejected by the court. 

Interestingly, the respondents did not make a cross-claim for trademark infringement. They did, however, argue that they were entitled to trade in New South Wales by reason of their registered trademark, and that it was a complete answer to any reliance by the applicants on the statutory proscription against misleading or deceptive conduct or for any remedy founded by the common law tort of passing off. The court, unequivocally rejecting this argument, stated that such a reliance by the respondents was misplaced because the rights conferred upon the owner of a trademark "do not extend to a licence to engage in conduct which is misleading or deceptive or to engage in conduct which constitutes passing off". Section 230 of the Trademarks Act 1995 (Cth) makes it clear that the rights of a claimant in an action for passing off are preserved against the owner of a registered trademark. Similarly, a registered trademark does not affect the operation of Section 18 of the ACL. 

The court found the applicants' evidence to be "less than satisfactory", but nevertheless found in its favour in finding that the respondents, in its use of 'Nappy land' and the domain name, had the potential to mislead persons and did in fact mislead persons. Justice Flick found that 'Nappy Land' and 'Nappyland' are sufficiently similar as to cause confusion and mislead or deceive. The potential for people to be misled was increased when considering the nature of the products supplied by both the applicants and the respondents. Given its findings on the ACL, the court found it unnecessary to consider the question of passing off, but did state that reliance on that cause of action would have been successful. 

The court concluded that some limited loss/damage has been occasioned by the conduct of the respondents when considering:

  • the nature and character of the conduct pursued by the respondents; and
  • the fact there was some evidence of customers being misled. 

While the applicants failed to provide the court with reliable material to quantity the loss/damage, they were awarded damages of $25,000.  The court found this amount to be within the bounds of accepted "guess work" and did not set out a precise basis for this for this particular figure. 

Interestingly, between the hearing on December 3 and 5 2013 and the delivery of judgment on February 14 2014, the respondents filed, on January 22 2014, Australian trademark application No 1602034 for NAPPY LAND in Classes 10 and 16. 

Lisa Ritson and Mary Papadopoulos, Ashurst Australia, Sydney  

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