Unenforceable injunction issued against US-based infringer

Australia

In Australian Competition and Consumer Commission v Chen ([2003] FCA 897), the Federal Court of Australia has issued an injunction restraining a US-based individual from publishing on websites accessible in Australia information relating to the Sydney Opera House that infringed its trademark rights and was likely to mislead or deceive consumers in Australia.

Richard Chen, an individual based in the United States, set up a number of websites under various domain names, including 'sydneyopera.org'. Chen falsely represented that his sites, one of which imitated the Sydney Opera House's official site, were affiliated with the Sydney Opera House Trust and that the trust approved or permitted his sale of tickets to events. The sites purported to sell tickets to performances but the purchased tickets were never issued.

The Australian Competition and Consumer Commission (ACCC) brought proceedings against Chen, and the Federal Court held that his conduct was misleading and deceptive in breach of the Trade Practices Act 1974. The ACCC requested an injunction restraining Chen from "publishing on the sites, or any similar internet site accessible in Australia, information or material relating to the Sydney Opera House, or events at the Sydney Opera House, that is misleading or deceptive or is likely to mislead or deceive consumers in Australia". However, any injunction against Chen issued in Australia would be unenforceable as he resides outside of that territory. He had also stopped taking bookings on his sites. The Federal Court, therefore, had to decide whether the injunction would serve any useful purpose.

The court concluded that it would be of benefit on the grounds that:

  • there was a risk that Chen might resume the misleading and deceptive conduct;

  • cross-border fraud and misleading conduct, particularly on the Internet, is a growing problem for the international community;

  • the ACCC would bring any orders made in the proceedings to the attention of the US Federal Trade Commission (FTC) and request its assistance pursuant to the Cooperation Agreement and in accordance with the International Consumer Protection and Enforcement Network's memorandum;

  • it could be inferred that the FTC would be more likely to institute action against Chen to curtail misleading or deceptive conduct in the United States that affected Australian consumers if an Australian court had granted injunctive relief rather than if it had not; and

  • when considering whether an injunction will be useful, courts should consider not only formal enforcement mechanisms, but the likely response of administrative agencies in foreign countries.

Accordingly, the court issued the requested injunction.

In its conclusion the court called for greater international cooperation, stating:

"While domestic courts can, to a limited extent, adapt their procedures and remedies to meet the challenges posed by cross-border transactions in the internet age, an effective response requires international cooperation of a high order [...] Clearly enough, much more needs to be done if Australian consumers are to be adequately protected against fraud or misleading conduct perpetrated over the Internet."

Julian Gyngell, Clayton Utz, Sydney

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