His Honour noted that in considering Section 18(1) of The Australian Consumer Law (Sch 2 to the Competition and Consumer Act 2010 (Cth)) - which provides "A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive" - the principles and substantial case law in relation to s 52 of the Trade Practices Act 1974 (Cth) continue to be applicable. He commented that -
In circumstances where a trader adopts a descriptive trade name the use by another trader of a trade name that also uses those descriptive elements will not generally (in itself) constitute misleading or deceptive conduct.The judgment states that
Since at least 2001, the applicant company Vendor Advocacy Australia Pty Ltd (‘VAA’) has carried on a business in Australia of representing and advising owners of real estate in selling their properties and in their dealings with real estate agents. Mr Ian Reid, who is the founder and principal of the business of VAA, has had a long career in the real estate. After working for VAA for a number of years, from about January 2011, the respondent, Mr Peter Seitanidis, carried on a similar business in competition with VAA. It is fair to say that there has been and continues to be a high level of animosity between Mr Ian Reid and Mr Seitanidis, demonstrated through their actions towards each other.Seitanidis is the registrant of several domain names featuring the words vendoradvocacy and vendoradvocate. The judgment states that
VAA disclaims any ownership of the expression ‘vendor advocacy’, and does not seek to prevent competitors from using that term. However, VAA seeks the relief it does because it believes there is the likelihood that consumers who intend to contact VAA will be misled, and that consumers who intend to visit VAA’s website will instead be directed to Mr Seitanidis’ site.
In general terms, VAA has sought relief in respect of:
- Breaches by Mr Seitanidis of copyright in VAA’s listing authority;
- Breaches by Mr Seitanidis of copyright in the text of VAA’s website;
- Mr Seitanidis’ conduct in passing himself and his business off as being VAA; and
- Misleading or deceptive conduct engaged in by Mr Seitanidis.
I need say very little about the copyright allegations, as on the fourth day of the trial Mr Seitanidis admitted breach of copyright, and VAA (upon its election to accept damages) indicated it was willing to accept $1.00 offered by Mr Seitanidis by way of nominal damages. A dispute remains as to the need for and the extent of declaratory and injunctive relief in respect of the copyright breach, to which I will return.
If VAA cannot succeed in its misleading and deceptive conduct claim, it cannot otherwise succeed in its passing off claim. Therefore, I proceed to consider only the misleading and deceptive conduct claim, which requires me to determine whether Mr Seitanidis engaged in conduct that misled or was likely to mislead, and whether he should be restrained from such conduct in the future.
At the outset, I indicate that whilst throughout these reasons I will be referring to the promotional activity of VAA and the need to put the documentation and oral evidence in context, this is primarily in an endeavour to show the relevant state of knowledge of consumers, and to put the conduct of Mr Seitanidis in context. There is no requirement for VAA to establish any reputation as an element of the misleading and deceptive conduct claim. However, to establish misleading and deceptive conduct in this proceeding depends upon the level of consumer perception of VAA’s reputation and how it promoted itself.Middleton J went on to state that -
Consumers may often remember promotional and advertising material imperfectly, and so may type in a domain name or visit a website they think is that of the advertiser, without being certain of the correct address. Further, the consumer may hear and see an advertisement but may not act on the material until some later time. In these circumstances, a consumer may not have the advertisement or promotional material in front of them, and may be forced to rely on that imperfect recollection. In addition, a consumer viewing a website may do so in circumstances that do not allow for in-depth consideration (for example, a website viewed on a mobile telephone screen), which compounds the imperfect recollection. In circumstances where a descriptive phrase is used, this imperfect recollection or confusion cannot give rise to liability on the part of a rival trader without more.
Further, clearly the “real life” use of brands is important, as is the use of a brand in the circumstances of the promotion or advertising relied upon by any applicant. ....
Basically, the enquiry is into the reason the misconception has arisen – to find a person liable, it must be because the impugned conduct has sufficiently caused the likelihood of deception, or the deception in fact: see eg Bromberg J in REA Group at [116] to [122]:
A certain amount of confusion is an inevitable outcome of the use of descriptive words.
As Emmett J noted in the context of trade marks in Connect.Com.Au Pty Ltd v GoConnect Australia Pty Ltd (2000) 178 ALR 348; (2000) 50 IPR 535; [2000] FCA 1148, at [61]:
The possibility of blunders by members of the public will always be present when names consist of descriptive words. So long as descriptive words are used by two traders as part of their respective trade names, it is possible that some members of the public will be confused whatever the differentiating words may be: see Sir Ninian Stephen at CLR229 in Hornsby Building.
A further consequence of this principle, noted by Marshall J in Insurance News Pty Ltd v JEM Nominees Pty Ltd t/a Insurance News Australia (2008) 80 IPR 239; [2008] FCA 1966, at [17], quoting Emmett J with approval, is:
...that for a descriptive name to become distinctive, “a very substantial amount of use in the relevant market would be necessary for it to acquire any secondary meaning.”
At [58] his Honour said: [58]
... where a descriptive trade name is used there will always be the possibility of confusion ... {and} where a descriptive name is used it will be difficult for that name to become distinctive of a particular business. Application to like businesses would not ordinarily mislead the public: see Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre.” (emphasis added)
These principles have been applied in many cases: see eg Equity Access Pty Ltd v Westpac Banking Corporation and Another [1989] FCA 506; (1989) 16 IPR 431; Australian Telecommunications Corporation v Hutchinson Telecommunications (Aust) Ltd (1009) 17 IPR 615; Dodds Family Investments Pty Ltd v Lane Industries Pty Ltd [1993] FCA 259; (1993) 26 IPR 261 (Gummow, French and Hill JJ); Commercial Dynamics Pty Ltd v M Hawke Nominees Pty Ltd (1996) ATPR 41-503 (Jenkinson, Miles and Finn JJ); Guide Dog Owners’ & Friend’s Association v Guide Dog Association of NSW & ACT [1999] FCA 316; (1998) 43 IPR 531 (Heerey, Carr and Mansfield JJ) and Betta Foods Australia Pty Ltd v Betta Fruit Bars Pty Ltd (1998) 41 IPR 347 (Goldberg J).And at [258] to [266] -
It is important to recall that conduct causing confusion is not necessarily co-extensive with misleading and deceptive conduct: see Google Inc v Australian Competition and Consumer Commission (2013) 294 ALR 404; [2013] HCA 1 at 407 [8] per French CJ, Crennan and Kiefel JJ; Campomar [2000] HCA 12; (2000) 202 CLR 45 at 85 [102], and REA Group at [79] per Bromberg J.
Therefore, I may summarise my conclusions as follows. The phrase “vendor advocacy” is descriptive and was generally used by various traders in the same line of business. I am not satisfied that the words or brand relied upon in this proceeding by VAA have any secondary distinctive meaning. VAA has primarily promoted itself by reference to the persona of Ian Reid. I do not consider that any consumer which assume that a reference to vendor advocacy, or Australian Vendor Advocacy, would be associated with VAA or Ian Reid. In fact, because Ian Reid has been so much at the front of the promotion of VAA, without his presence the consumer may well assume it is not associated with him or VAA. Any imperfect recollection of consumers would arise from VAA’s adoption of a name consisting of descriptive words. The lack of recall will be as a result of the promotional activity adopted by VAA, by reference to the descriptive words ‘vendor advocacy’.
Looking then at the domains. There is no doubt that once the consumer enters the domain of Mr Seitanidis there can be no confusion of the type complained of by VAA. The content of the sites are quite distinct. Even if there was momentary ‘confusion’ in the mind of a consumer upon searching vendor advocates, or even Australian Vendor Advocacy, I do not think this would justify in a finding of misleading and deceptive conduct on the part of Mr Seitanidis.
A transitory incorrect impression, or a transient period of being misled even, would not necessarily lead to there being liability imposed upon a respondent: see eg Knight v Beyond Property Pty Ltd [2007] FCAFC 170; (2007) 242 ALR 586, at [54], [58].
I have not needed to enter the debate as to the significance of the various accoutrements of domain names, such as “.com.au”. I agree with the observations of various judges that consumers do not pay any real attention to such references: see eg Architects Australia at [21]; Solahart Industries Pty Ltd v Solar Shop Pty Ltd [2011] FCA 700; (2011) 281 ALR 544 at [49]; Sports Warehouse v Fry Consulting Pty Ltd [2010] FCA 664; (2010) 186 FCR 519 at [155] and REA Group at [128] to [129].
I do observe that, in the context of searching the internet, consumers will be vigilant when confronted, as they are, with many domain names referring the phrase “vendor advocacy”. Of course, if the consumer knows of Ian Reid and are looking for his business, they will look for the entity or entities specifically associated with him.
I interpolate that if the consumer had visited a VAA site previously, the consumer would be familiar with the Ian Reid persona, and could not be misled by the conduct of Mr Seitanidis in his use of his domain names. In this context, I accept that the websites of VAA were very popular. I do not know the extent of the popularity compared to all websites of vendor advocates. In any event, the popularity of the VAA website does not lead to the conclusion that any secondary meaning has been established through such websites in the terms “vendor advocacy” or “Vendor Advocacy Australia”, or that a not insignificant proportion of consumers would associate those terms with VAA. A consumer on the internet would still view the terms as descriptive and would not assume any association between each website.
If there is an imperfect recollection of the type suggested by VAA, any confusion, as I have said, arises from the advantage of a descriptive trade name as used by VAA. If the consumer has never heard of VAA, Mr Ian Reid, or Vendor Advocacy Australia, he or she may be ‘confused’ with the various different vendor advocates, but this would not be because of the conduct of Mr Seitanidis. Therefore, in my view, VAA failed to demonstrate that the conduct of Mr Seitanidis complained of was misleading and deceptive.
